Interchange is core cost of accepting cards, and it’s the reason why the fees you pay fluctuate every month. They’re also the reason why they seem to increase every year. It is one of three types fees on your statement, and the main driver of interchange is the card product.
Between Visa, MasterCard, and Discover, there are over 100 different products
(think debit vs. credit) and every product has its own set of interchange rates.
Which rate you pay depends on several factors:
Your Industry (based on MCC codes)
The Card Product Accepted
How You Process (card present, key entered, e-commerce)
The Level of Data Provided
InterChange 101
Industry
Most industries, including B2B, are handled through the primary interchange structure. Industries such as restaurants, real estate, supermarkets, or non-profits have variations in interchange and qualification and should not be viewed through the same lens.
Card Product Groups
Rather than address each individual product, we’ll address them in groups: Debit, Consumer Credit, Business Credit & International.
Debit has the lowest cost, with Regulated Debit costing as little as 0.05% + $0.22.
Consumer Credit comes in a higher cost, which ranges based on the level of rewards enjoyed by the cardholder.
Business Credit is the highest cost domestic credit cards and includes Purchasing, Corporate and an array of small business credit cards; Level 2 or Level 3 data is required to access the lowest interchange costs.
International Cards are card issued by a non-U.S. Bank and have the highest cost, but not due to interchange, rather due to high cross-border fees (and sometimes extra markup from the processor).
InterChange 101
Data Levels
In combination with the method of processing, the type of data you provide with each transaction is vital, especially when accepting commercial credit cards. Level 2 & 3 only apply to commercial credit cards.
Level 1 is the most basic, consisting of the card data, dollar amount and merchant data. AVS (address verification) is required on all keyed transactions.
Level 2 is the tax amount charged and invoice number.
Level 3 is invoice level detail, including product information.
