Interchange 101

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Learn why it isn’t about the rates.

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Interchange 101

  1. 1. Payment Processing, Inc.<br />I have a great rate… NOT!<br />Your Payment Professionals<br />
  2. 2. Payment Processing, Inc.<br />I have a great rate… NOT!<br />Your Payment Professionals<br />
  3. 3. Transaction Process<br />Issuing Side<br />Acquiring Side<br />Issuers<br />Merchant’s Local Bank<br />Cardholder<br />PPDirect<br />HOST - Back-End, Processor<br />Merchant <br />HOST - Front-End, <br />Processor<br />
  4. 4. Cost of Processing<br /><ul><li>Interchange
  5. 5. Monthly Service Fee
  6. 6. Authorization Fee(s)</li></li></ul><li>Interchange<br />Four Contributing Interchange Factors:<br />The type of card used for purchase.<br />The way the transaction was handled.<br />The type of business accepting the card.<br />The amount of the sale/purchase.<br />
  7. 7. There are 250 Interchange Rates<br />
  8. 8. Interchange<br />Interchange CAN AND WILL be anywhere between<br />0.00% - 3.10%<br />THIS DOES NOT MATTER!!!<br />
  9. 9. Interchange<br />Example<br />How much will a transaction cost if I run a $1,000.00 ticket? <br />What information do we need to answer this correctly?<br />
  10. 10. Interchange<br />1. What type of Business?<br />Utility Company<br />Restaurant<br />Petro<br />New Car Dealer<br />
  11. 11. Interchange<br />2. What type of Card?<br />Rewards Card<br />Consumer Card<br />Check Card<br />Corporate Card<br />
  12. 12. Interchange<br />3. Swiped or Keyed in Transaction<br />
  13. 13. Interchange<br />% of total dollar amount of settled sale with no maximum or minimum limits imposed<br />0.00% - 3.10%<br /> Discount Rate<br />Fixed item fee regardless of amount of sale, but can vary by interchange category<br />$0.00 - $35.00<br />Small % of total dollar amount of settled sale that goes directly to Visa & MasterCard<br /> Discount Per Item<br />.0925% - .0950%<br />Dues & Assessments<br />
  14. 14. The Only “Rate” That Matters<br /><ul><li>The only rate that matters is the effective rate of accepting cards.
  15. 15. Total Fees / V,MC Sales = Effective Rate
  16. 16. This is the “rate” that tells the entire story!!!</li></li></ul><li>The “Rate” That Matters<br /><ul><li>$135,674 V,MC Sales & $2,794 Fees
  17. 17. $97,354 V,MC Sales & $1,974 Fees
  18. 18. $42,962 V,MC Sales & $1,346 Fees
  19. 19. $64,397 V,MC Sales & $1,642 Fees</li></ul>2.06%<br />2.03%<br />3.13%<br />2.55%<br />
  20. 20. Types of Statements<br />Tiered<br />1.75%<br />2.50%<br />3.21%<br />Mid -Qualified<br />Non -Qualified<br />Qualified<br />
  21. 21. Types of Statements<br />Surcharge<br />Hamburger <br />Menu Price = $2.50<br /><ul><li>Bun = $1.50
  22. 22. FF = $2.00
  23. 23. Cheese = $3.00
  24. 24. Ketchup =$1.00
  25. 25. Lettuce = $1.00
  26. 26. Tomato = $1.00
  27. 27. Plate = $1.25
  28. 28. Napkin = $0.50
  29. 29. Pickle = $1.00</li></ul>Actual price = $14.75<br />
  30. 30. Interchange<br />The PPI Difference….<br /><ul><li>Technology
  31. 31. Our terminal level software is programmed to automatically seek and identify the best possible level of interchange for each specific transaction and assign it appropriately.</li>

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