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Posted on 02-22-2012

To most merchants (business owners), the interchange plus merchant account structure is foreign and sounds more complicated than the tiered structure, but in reality, just the opposite is true. The interchange plus structure is much more transparent and is easier to understand than tiered rates. In most cases, it ends up being the less expensive choice. Interchange plus pricing is simple. The merchant account provider takes the exact interchange reimbursement fee it is being charged and adds a flat markup to it. This completely eliminates any confusion or inconsistencies caused by a providers secret tier matrix.

Interchange plus accounts have two rates that are charged to each transaction instead of each transaction falling into one of three, four or five tiers (or more, in rare cases). The two rates are the interchange markup and the transaction fee.

Interchange markup fees are percentages added onto the interchange reimbursement fee. The percentage is measured in units called basis points. One basis point is equal to 1/100 of a percent. So, a transaction with a 29 basis point markup is 0.29% over the interchange reimbursement fee. The transaction fee is a flat fee based on the type of transaction. A common transaction fee is a $0.15 authorization fee for charge cards.

At one time, interchange plus pricing was available only to large merchants processing over $30,000 in credit card sales each month. Today, due to fierce competition, this pricing structure is becoming more widely available to smaller merchants and new businesses.

If you aren't sure if you are on interchange, it's important to call us today to have an account specialist review your pricing. Most likely (about 4 out of 5 merchant accounts) you are on a form of tiered pricing, meaning there are potentially $1,000's a year you are over-paying!

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