True transparency can only be achieved with a pricing model that splits out the three elements of the merchant service charge, being the interchange fee payable to the card issuer, the fee charged by Visa & MasterCard as the card schemes and finally the processors margin for processing the payment. This is known as interchange plus plus pricing.
The most important thing is that acceptcards will provide details and advice to each merchant along with our recommendation as to the most suitable option for their requirements. Although most SME’S will tend to opt for blended rates, with larger businesses preferring the transparency of interchange plus plus, it’s important in our eyes that everyone has the facts fully explained to them on all the options.
Three Pricing Methods:
Blended Rates
Provides one rate which covers interchange, card scheme fees and the processors margin all blended together but with little transparency as to which organisation takes what. Whilst this can be appealing to some merchants for security and simplicity of pricing, it may not be the best option for those with a significant transaction volume.
(Following the big drop in domestic credit card interchange from 0.8% to 0.3% on 9th December 2015, our analysis in most cases shows that many clients will not have seen this reduction reflected in their blended rates. Significant reductions can therefore be obtained for clients on this charging method.
Interchange Plus
Offers slightly more transparency than blended rates, and are separated into two components. Interchange fees on the one hand, the processor and scheme fees blended together on the other. This is a good option for merchants wishing to track and benefit from lower interchange rates.
Interchange Plus Plus
This pricing model identifies and reflects all three pricing elements of the merchant service charge, providing the merchant with true cost transparency. It means that, along with tracking changes in interchange paid to card issuers, merchants can see exactly what percentage of their transaction fee the processor takes, along with what amount is taken by the Visa & MasterCard scheme fee.
We can analyse a merchants payment traffic and depending on the interchange and scheme fee rates on the type of cards they accept, we can provide a comparison on costs of interchange plus plus versus their current blended pricing.
Some of the processors have systems that can’t provide interchange plus, plus, or in some cases they’d prefer not to make merchants aware that they can offer it! This is where our independence and market knowledge adds value in that we can arrange any of the pricing options no matter what the size of the business.
