Below is a simple example which illustrates how interchange plus pricing often results in lower processing costs than discount pricing. This example assumes a $200.00 transaction involving a Visa check card (debit card) for an e-commerce merchant.
We assume that the transaction qualifies for the lowest interchange rate for Visa debit cards which is 0.05% + $0.22% (regulated debit). We assume that this transaction would be processed at the qualified rate in the case of discount pricing.
|
Interchange Plus Pricing |
Discount Pricing |
Savings | |
|
Pricing Assumptions |
Interchange + 30bp (0.3%) + $0.10 |
1.99% qualified discount rate + $0.20 |
|
|
Merchant Receives |
$198.74 |
$195.82 |
|
| Total Transaction Costs |
$1.26 View Calculation Details |
$4.18 View Calculation Details |
$2.92 |
The merchant who has interchange plus pricing in this example pays $1.26 in total processing fees for the $200 transaction. The merchant with tiered or discount pricing pays $4.18 for the same transaction. As you can see, overall pricing costs are usually much higher with tiered or discount pricing.