Interchange Plus
Encyclopedia
Interchange Plus is the common name for a pricing structure for accepting credit card transactions by merchants.
The Interchange fee
is an important factor in determining the actual cost of accepting creditcards.
In Europe, the most common commercial contract between a merchant and the bank (the acquiring bank
) consists of a fixed commission percentage called the Merchant Service Commission or MSC.
Based on characteristics such as volume, national/international traffic and risk, the acquirer negotiates a fixed MSC for all transactions with the merchant. This is called a blend rate because it blends in all different rates buying in one selling rate for the acquiring bank. Calculated in the blend rate is an insurance for the acquiring bank against changing buying rates.
Interchange Plus pricing means that the acquirer charges you a variable MSC consisting of the cost price plus a fixed markup.
This MSC will then vary between transactions depending on the characteristics of the transaction such as card type, channel (point of sale, e-commerce or call center) and security measures involved (Card Verification Code, 3-D Secure
).
This gives merchants insight in the cost of their payment traffic and can also realize a lower total payment cost.
In the USA and for corporate merchants, interchange-plus pricing is common practice.
The Interchange fee
Interchange fee
Interchange fee is a term used in the payment card industry to describe a fee paid between banks for the acceptance of card based transactions. Usually it is a fee that a merchant's bank pays a customer's bank however there are instances where the interchange fee is paid from the issuer to...
is an important factor in determining the actual cost of accepting creditcards.
In Europe, the most common commercial contract between a merchant and the bank (the acquiring bank
Acquiring bank
An acquiring bank is the bank or financial institution that processes credit and or debit card payments for products or services for a merchant. The term acquirer indicates that the bank accepts or acquires credit card transactions from the card-issuing banks within an association...
) consists of a fixed commission percentage called the Merchant Service Commission or MSC.
Based on characteristics such as volume, national/international traffic and risk, the acquirer negotiates a fixed MSC for all transactions with the merchant. This is called a blend rate because it blends in all different rates buying in one selling rate for the acquiring bank. Calculated in the blend rate is an insurance for the acquiring bank against changing buying rates.
Interchange Plus pricing means that the acquirer charges you a variable MSC consisting of the cost price plus a fixed markup.
This MSC will then vary between transactions depending on the characteristics of the transaction such as card type, channel (point of sale, e-commerce or call center) and security measures involved (Card Verification Code, 3-D Secure
3-D Secure
3-D Secure is an XML-based protocol designed to be an added layer of security for online credit and debit card transactions. It was developed by Visa with the intention of improving the security of Internet payments and offered to customers as the Verified by Visa service...
).
This gives merchants insight in the cost of their payment traffic and can also realize a lower total payment cost.
In the USA and for corporate merchants, interchange-plus pricing is common practice.