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  • Writer's pictureDavid VanHeel

What do all these terms mean? Explanation of Interchange....

Most merchants have payment processing. It's sort of a necessity if you want your business to grow.

What do all those terms mean? We will be explaining them over the next few weeks. Most payment processors actually gloss over them because they don't really want you to know or go too much in depth...they're hoping you don't dive too deep because that way they can throw in fees that aren't necessarily legitimate (FYI...we don't do that, if you ever want an explanation of your statement call your Account Officer).

So what is Interchange? Interchange is also called wholesale, pass through, or cost at times. It's the cost of the card going through the system. It's determined by whoever issued the card. Some cards are more expensive than others. For example, if the card has added features like cash back, points, mileage benefits, serves breakfast in bed (wouldn't that be nice?), the rate will be higher. If there aren't any frills, it's going to be a lower rate.

The important thing is to know the "Average Interchange Rate". Currently, (10/07/2022) it's sitting about 1.81%. Why is that important? Because all of the different ways you would get charged from a merchant processor are all based off the average interchange rate.

One program is called "Interchange Plus". So it's basically the cost of the card going through the system plus the cost of the program. It's usually the least expensive type of merchant processing account.

We'll be going over the other typical types of programs that are out there in future posts.

In the meantime, if you would like more information, an audit of your current program, or just want to see how we can help you, we'd love to speak with you.

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