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Everything You Need to Know About Interchange Fees.

What’s the deal with interchange fees? Let’s go through some commonly asked questions so you can find the best merchant services solution for your small business.

What is an interchange fee?

Interchange fees, or sometimes called interchange rates, are charged to merchants for each credit and debit card payment they accept. The fee is charged by banks and credit card networks for facilitating the transaction.

How are interchange fees charged?

To put it simply, an interchange fee is actually made up of multiple fees. Card-issuing banks, credit card networks (like MasterCard® and Visa®), payment gateways, and even your bank will all charge a percentage-based fee on every transaction. This typically appears as a single, bundled amount on the bills from your payment processor.

What are average interchange fees?

Interchange fees are common expenses for merchants and businesses. They typically include both a percentage cost and fixed cost, such as 2% of a transaction + $.20. The amount of the interchange fee varies greatly by card network, card type and transaction type. Even your business’ MCC (merchant category code) can affect your interchange fee. Because of this, it’s hard to determine an “average” cost.

For example, debit cards typically have lower interchange fees than credit cards. Swiped transactions typically cost less than keyed ones. And high-rewards credit cards typically have high interchange fees for merchants.

How can you lower your interchange fees?

While you can’t control the type of cards your customers use, there are several things you can do to manage your interchange fees. Since the fees rely heavily on how transactions are processed, you should make sure you and your staff are always following best practices around card acceptance. That can mean capturing CVV information for keyed transactions or getting address information for online transactions.

PCI Compliance is also mandatory for any merchant accepting cards. These guidelines help protect both you and your customers from data breaches and can affect your interchange fees if you’re not compliant. By making sure your business is compliant, you can ensure you’re saving on potential fees.

Fraud prevention should always be top-of-mind for business owners, especially because you could lose your hard-earned cash to fraudulent card transactions. Fraudsters get more creative every year, so make sure you’re staying up-to-date on the latest trends. That means that you and your staff should have ongoing training as part of your work schedule. Make sure that everyone is knows the best practices for card acceptance and is aware of potential red flags when processing payments.

How do you find the best merchant services provider for you?

When it comes to choosing the best merchant provider, there are a lot of things to consider. The amount of transactions, as well as transaction type play key factors, but more importantly, find a provider who will be your financial partner – who will help you stay up-to-date on fraud trends, help you discover best practices and help you manage your interchange fees.

Commerce Bank has a long history of doing just that. We have a variety of educational resources if you’re considering making a change in your merchant services provider. Learn more by speaking with one of our payment specialists. We’d love the opportunity to give you a cost-free analysis of your payment processing and see if we can save you some money.



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