MerchantPro Express Blog

Merchant Services Terms Explained: Interchange Plus Pricing

Posted by on Jan 13, 2017 12:30:43 PM

Interchange vs. Interchange Plus: What’s the Difference?

Batch Fees. Authorization Fees. Point of sale software. Next-day funding.

Unless you’re in the credit card processing industry, trying to wrap your head around these phrases and fees can be challenging—even if you have a merchant account for your business. The terminology can be confusing and it can take a while before you start to understand all of it.

One of the most common terms in credit card processing that can have merchants scratching their heads is interchange plus pricing. But in order to grasp the idea behind that billing platform, you first need to know what interchange means. 

Here’s a breakdown for you:

Interchange

Interchange is a system of rates and fees that Visa, MasterCard and Discover charge merchant processors for transactions.

There are about 1,000 different interchange rates that can vary based on:

  • Type of card used
    • Credit
    • Debit
    • Rewards
    • Corporate, etc.
  • How the card was processed
    • Swiped
    • Keyed
    • Online, etc.
  • Industry type
    • Retail
    • Restaurant
    • B2B
    • Lodging
    • E-commerce, etc.

Because processors are always charged interchange fees, they aim to price their merchant services so they can at least cover those costs and earn a small profit for themselves. This is why you’ll likely notice a category of fees called interchange on your merchant statement.

Learn more about what interchange is.

Interchange Plus Pricing

Interchange plus, also referred to as IC plus, is a billing platform set up for a merchant to accept credit card and debit card transactions. This is a way to pass through the interchange costs that a processor gets charged from Visa, MasterCard and Discover. Your processor will add basis points on the total volume and pennies per transaction.

A common pricing structure looks something like this: “Interchange plus 0.50% and $0.10.”

This means that the merchant will pay whatever the interchange fees are PLUS 0.50% (or 50 basis points) times the volume processed and $0.10 for every transaction.

Merchant Beware

Both terms above are frequently used in the credit card processing industry. You also may have heard of the less well known phrase: interchange plus plus.

Although the extra “plus” may make it sound like you would save an extra amount of money, you should err on the side of caution. It is probably a deceptive pricing technique that makes you think you're paying "interchange plus," but are actually paying additional costs.

Remember, your merchant processor is providing you with a service. If you are unhappy with that service and/or being charged hidden credit card processing fees, it may be time to find a new processor. If so, we hope you'll consider us.

Find out how to lower your credit card processing fees.

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