Main Street Merchant Solutions specializes in Interchange Plus pricing.
Interchange Plus pricing is often reserved for very large merchants who have the scale and financial sophistication to insist on Interchange Plus pricing. Main Street Merchant Solutions levels the playing field by making this pricing approach available to merchants of all sizes.
The idea behind Interchange Plus Pricing is simple:
- The actual interchange fees and assessments are passed at cost to the merchant. As discussed on Interchange Fees and Assessments, all Visa and MasterCard credit card and check card transactions have associated interchange fees and assessments. Regardless of where you get your merchant account, the reality is that your merchant account provider must pay those costs one way or another.
- A fixed mark-up is applied to each transaction. The mark-up usually has a percentage component as well as a fixed dollar component.
Suppose you receive the following merchant account pricing quote: "interchange plus 30bp and $0.10". What does that mean? It means the following:
- You will pay actual interchange fees and assessments as described on Interchange Fees and Assessments, plus
- You will pay an amount equal to 30bp (0.3%) on the value of each transaction, plus
- You will pay $0.10 on each transaction.
Let's take a concrete example. Suppose a customer makes a $100.00 payment using their credit card. Assume the interchange rate for the transaction as determined by the relevant card association is 1.6% + $0.15. The total costs assuming an interchange plus pricing program would be as follows:
Interchange Plus Pricing Example
$100.00 x 1.6% + $0.15
Interchange Fees are paid out to the Issuing Bank (the bank that issued the purchaser's card)
|Assessments and Network Fees||$0.15||
$100.00 x 0.13% + $0.02
Visa and Mastercard charge "assessments" on credit card transactions. The assessment rate for Visa is 0.13% for credit card transactions. In addition, Visa and Mastercard both impose a processor fee of about $0.02 per transaction.
|Merchant Account Provider Revenue||$0.40||
$100.00 x .3% + $0.10
The "Plus" part goes to the merchant account provider. It covers the merchant account provider's processing costs and business costs. The amount left over after all costs have been paid is profit.
$1.75 + $0.15 + $0.40
Your total cost when using interchange plus pricing is the sum of the interchange fees, assessments and merchant account provider revenue.