To help you better understand the fees that you are paying, the following is a breakdown of the key cost components of a standard credit card transaction.
What is Interchange?
- The amount paid to the Card Issuer as compensation for expenses incurred in providing lines of credit to cardholders
- 250 Interchange categories represent 60-70% of total fees
What do Interchange rates pay for?
- Cardholder Line of Credit (including Risk)
- Cardholder Statements
- Detailed Reporting
- Rewards Benefits
What factors influence Interchange rates?
- Card Type – Debit Cards, Credit Cards, Rewards/Points Cards, Business/Purchasing Cards, International Cards
- Processing Environment – Swipe, Mail/Phone, Internet, Pay-at-Pump
- Industry Type – Retail, Restaurant, B2B, Hospitality, Quick Service, Supermarket, Utility, Education
- Transaction Amount – Small versus Large Transaction Amounts
- Additional Processing Data – Line Item Details
What are Dues & Assessments?
- The flat amount paid to the Credit Card Association (Visa or MasterCard)
- Represents 5-10% of total fees
What do Dues & Assessments pay for?
- Network Infrastructure
- Establishment/Maintenance of Rules and Pricing
- Research and Development
- Marketing and Branding
What is a Processor Fee?
- The fee paid to the Acquiring Bank or Organization that handles the transaction
- Represents 20-30% of total fees
What do the Processor Fees pay for?
- Communication Costs (Dial or Internet)
- Customer Support
- Technical Support
- Equipment Downloads
- Risk/Underwriting
- Statements/Billing
- Product Development
- Other Overhead Expenses
What factors influence a Processor Fee?
- Overall Operating Costs
- Market/Industry Competition
- Risk Exposure
- Processor Pricing Model
