If you’re a business owner that wants to accept debit or credit card payments, interchange is an essential cost of processing such transactions. What interchange is, who it’s dictated by, and how your business may be impacted can all be unclear if you’re not familiar with the world of payment processing. Read on to learn more about what interchange is, and what it means for your business.
What is interchange?
Interchange or interchange rate is an amount that payment processors, like Moneris, are required to pay credit card issuers and/or financial institutions for each credit or debit card transaction processed by their merchants. Interchange rates are set and regulated by the card brands (i.e. Visa® or Mastercard®), and can vary depending on the card type, transaction type, business type and/or the risk associated with a transaction. For example, a corporate credit card that is used for a chip & PIN transaction may receive a different interchange rate than a recurring payment made using a consumer credit card.
How are interchange rates calculated?
An interchange rate is a percentage fee applied to the applicable transaction amount and contributes to your total processing cost. Interchange rates are not set in stone and adjustments can be made by the card brands from time to time. You can visit the card brand sites for more information on their current interchange rates.
What do payment processors have to do with interchange?
Payment processors pass through the interchange rates set by the card brands to their merchants. Moneris offers simplified pricing, which makes it easier to understand the costs associated with processing payments by clearly outlining the components that make up your processing fees, including interchange rates. With simplified pricing, the interchange rates are passed through to you and can be reviewed on your Moneris statement.
For more information on simplified pricing, make sure to check out What is Simplified Pricing?
The information in this article is provided solely for informational purposes and is not intended to be legal, business or other professional advice or an endorsement of any of the websites or services listed. VISA is a trademark owned by Visa International Service Association and used under license. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.