Interchange 101
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19-Oct-2014 -
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Transcript of Interchange 101
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Your Payment Professionals
Payment Processing, Inc.I have a great rate… NOT!
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Your Payment Professionals
Payment Processing, Inc.
I have a great rate… NOT!
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Issuers
Cardholder
Merchant
Issuing Side Acquiring Side
HOST - Front-End,
Processor
HOST - Back-End, Processor
Merchant’s Local Bank
PPDirect
Transaction Process
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Cost of Processing
Interchange
Monthly Service Fee
Authorization Fee(s)
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Interchange
Four Contributing Interchange Factors:
1. The type of card used for purchase.
2. The way the transaction was handled.
3. The type of business accepting the card.
4. The amount of the sale/purchase.
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There are 250 Interchange Rates
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Interchange
Interchange CAN AND WILL
be anywhere between
0.00% - 3.10%
THIS DOES NOT MATTER!!!
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Interchange• Example• How much will a
transaction cost if I run a $1,000.00 ticket?
• What information do we need to answer this correctly?
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Interchange
1. What type of Business?
Utility Company
New Car Dealer
Petro Restaurant
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Interchange
2. What type of Card?
Consumer Card Rewards Card
Corporate CardCheck Card
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Interchange
3. Swiped or Keyed in Transaction
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Interchange
Discount Rate
Discount Per Item
Dues & Assessments
% of total dollar amount of settled sale with no maximum or minimum limits imposed
Fixed item fee regardless of amount of sale, but can vary by interchange category
Small % of total dollar amount of settled sale that goes directly to Visa & MasterCard
$0.00 - $35.00
.0925% - .0950%
0.00% - 3.10%
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The Only “Rate” That Matters
The only rate that matters is the effective rate of accepting cards.
Total Fees / V,MC Sales = Effective Rate
This is the “rate” that tells the entire story!!!
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The “Rate” That Matters
$135,674 V,MC Sales & $2,794 Fees
$97,354 V,MC Sales & $1,974 Fees
$42,962 V,MC Sales & $1,346 Fees
$64,397 V,MC Sales & $1,642 Fees
2.06%
2.03%
3.13%
2.55%
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Types of StatementsTiered
1.75% 2.50% 3.21%
Qualified Mid -Qualified
Non -Qualified
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Types of StatementsSurcharge
Hamburger Menu Price = $2.50
• Bun = $1.50• FF = $2.00• Cheese = $3.00• Ketchup =$1.00• Lettuce = $1.00• Tomato = $1.00• Plate = $1.25• Napkin = $0.50• Pickle = $1.00
Actual price = $14.75
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Interchange
TechnologyOur terminal level software is
programmed to automatically seek and identify the best possible level of interchange for each specific transaction and assign it appropriately.
The PPI Difference….