Interchange Pricing

Making Sense of your payments

What is interchange-plus pricing?

Interchange+ (also known as Cost+ pricing) is the pricing method used by Epic Financial Systems to give our merchants the lowest cost and the most transparency. Interchange are the rates charged by the card brands (Visa, MasterCard, Discover, AMEX) for use of their card. We pass the interchange costs directly on to you with an added set fee for our services (ex: 0.25% + $.10 per transaction). Example: Your customer uses a “Visa CPS Retail” credit card. The interchange rate for that card is 1.51% + $.10. We pass the interchange costs directly through to you plus our set fee of 0.25% + $.10. For this transaction, you would pay 1.76% + $.20.

Current US Interchange Rates

Visa Interchange Rates –
https://usa.visa.com/support/small-business/regulations-fees.html#1
Mastercard Interchange Rates
https://www.mastercard.us/en-us/business/overview/support/merchant-interchange-rates.html
 

Base Interchange Rates

The interchange fees are fees required by the card brand who issued the card being used for the transaction – Visa, MasterCard, American Express, or Discover. These rates differ from card to card but are industry set – everyone pays the same interchange rate. Interchange rates are the base of every pricing model.

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Interchange Plus Pricing
This is the pricing model Epic Financial Systems uses. Interchange Plus Pricing takes the same interchange rates and adds a tiny processor set fee to the transaction. As you can see from the chart below, the processor fee is always the same no matter what card is being used. This is by far the least costly pricing model for the business.

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Flat Rate Pricing
While flat rate pricing is easy to understand, it is extremely expensive for the merchant. In fact, it’s the most expensive pricing. Flat rate pricing, as it’s name implies, charges the merchant the same rate for all cards no matter what the interchange rate is. The chart on the left shows a flat rate of 2.9% which is a common rate with the biggest flat rate processors. In this example, when a debit transaction is run, the processor is making 2x more profit than Visa.

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Tiered Pricing
 Tiered Pricing, also referred to as bucket pricing, standard pricing, qualified pricing, or packaged rate pricing, is a rate structure in which several hundred different processing rates (aka: Interchange) are packaged into separate pricing tiers. Most providers package the rates into 3 groups often called “Qualified,” “Mid Qualified,” & “Non-Qualified” rates. These tiers, or “buckets,” represent 3 different possible fee tiers imposed by a provider on credit card transactions ran by a merchant, with Qualified transactions receiving the lowest markups & Non-Qualified transactions receiving the highest markups.

Bucket pricing