Interchange Rate Optimization

When most processors look to rate savings, they are just looking at the few tenths of a percent the processor is charging. This is the tip of the proverbial iceberg when it comes to your fees. The vast majority of what you pay is the underlying fee, called Interchange. We can help you attack the interchange, slashing total costs where others may be unable to find savings at all.

Interchange, simply put, is the collective name given to the hundreds of various fees set by the card brands (Visa / MC / Discover / Amex). As these fees are set by the card brands, they are the same no matter which processor you work with.

Which interchange rate level you get on a given transaction is governed by two main factors. First is the card type you are accepting (debit, credit, rewards card, etc.) which you can do little about. The second is the authorization information provided…the card brands “like” some transactions better than others, based on how you process and award them with significantly better rates. The cost to process the exact same card can vary by up to 35% just based on how you submit the transaction.

We will consult with your business to show you how to leverage the following to drive down your processing costs:

Business Level 2 and Level 3 interchange: If your business accepts credit card payment from other businesses (business issued credit cards), you stand to save substantially by optimizing the interchange. The below example is from Visa, and the rates you see are all for the exact same card type. The interchange can vary from 2.95% down to 1.85% on the same transaction, a difference of over 35%! We’ll show you how to achieve and even automate Level 2 and Level 3 interchange on your transactions.

Large ticket: Does your business accept large ticket transactions from other businesses?  Is it looking to reduce the cost to do so?   Or, would you like to get the speed and convenience of taking payment by credit card, but are worried about cutting into your margins?

For B2B transactions starting at $10,000, the card brands provide “Large ticket” interchange programs that vastly reduce the cost to process these transactions.   Below is an example from Visa’s interchange chart. We’ll help you determine how to qualify and you how to achieve Large Ticket interchange rates.

GSA and G2G transactions: If you operate a business that receives payment from your local, state or federal government on credit card, these transactions can qualify for GSA Large Ticket programs. Many government agencies utilize a GSA SmartCard as a way to streamline their procurement process.   These cards can be utilized at qualified businesses to make governmental procurement purchases.

Registering as a GSA Advantage vendor is a tedious process, but can be an exceedingly lucrative one for certain businesses: https://vsc.gsa.gov/faq/startup-kit.cfm

Convert keyed transactions to card present: Banks “like” card present (swiped or EMV chip) transactions better than manually keyed transactions. There is less potential for fraud and harder for the cardholder to dispute. Given that, they assign lower rates on these transactions. We’ll show you how to efficiently and effectively utilize mobile transactions. Rather than key in the transaction at the office, have your salespeople, installers or delivery drivers collect payment on the spot.   In addition to lower rates, you’ll enjoy accelerated cash flow and fewer billing disputes.

Avoid downgrades on keyed transactions: When a transaction is manually processed (keyed), there are certain data points the card brand is looking for when deciding what rate that transaction will receive. While you may understand this conceptually, would you know how to review each line item on your statement to determine if the transactions are getting the rates they should? We can help ensure that you or your staff are properly qualifying your transactions so that you are getting the best possible rate on a given transaction.

Correct as you go: Utilize card on file payment options to store not only the customer’s card but billing address as well. Our payment systems will show you immediately upon processing the transaction if the billing address and/or CVV info matched what the issuing bank has on file or not. This way you can correct the information for use in subsequent transactions from that client.

Proper SIC / MCC: Did you know that fuel and petroleum get sellers get special discounted rates? That a deli and a convenience store get two different rates from the card brands? Or that a convenience store and a supermarket have different fees? If you are a medical office and are not properly coded, you may not be able to accept HSA cards. Or certain travel services if not correctly coded cannot accept certain fleet cards and T&E cards. Did you know that if your business isn’t properly set up for tip adjustments or rental authorizations, your transactions downgrade to higher rates? Charities, educational services and utilities all have special discounted rate programs as well.

This is all driven by the MCC (Merchant Category Code) assigned to your account, which basically tells the card brands what type of business you are, and therefore which rates to apply. While it sounds simple, we’ve seen many instances of businesses vastly overpaying simply due to their processor assigning them under the wrong code.

Interchange credit vouchers: Does your business run any volume of returns or refunds? Some processors charge a business to run a refund. Others do not. And still, others refund the original processing fee when you run a refund. Do you know (not think you know) which your processor does? The answer could be worth thousands of dollars a year to your business.