|
Written by Brent D. Gardner, CLU, ChFC
|
|
Merchant accounts that operate on an interchange plus pricing plan, which may be more complex initially, is actually much more transparent and significantly less expensive than the old-fashioned tiered accounts.
On an interchange plus pricing plan, the merchant pays the exact interchange fee in addition to a flat markup to their payment processor. This eliminates the merchant risk of overpaying for inflated tiers.
Unlike old-fashioned tiered accounts that can have several different rate categories, interchange plus accounts only have two rates - the interchange markup percentage and a transaction fee.
For example, a business with an interchange plus merchant account with a rate of 0.25% and an authorization fee of $0.15 would pay the wholesale processing rate for every transaction plus 0.25% and $0.15 per transaction.
The percentage part of interchange plus pricing is referred to as basis points. A basis point is equal to 1/100th of a percent. For example, 0.25% is the same as 25 basis points.
Until recently, interchange plus pricing was only available to larger businesses that processed very high volumes of credit card sales - usually $25,000 or more per month. One of the benefits of using United Bank Card is that we offer interchange plus programs to all size merchants.
|
