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Month: December 2016

HOW IS INTERCHANGE DETERMINED FOR A TRANSACTION?

Posted on by tushar

No matter how comprehensively you understand the world of payment processing, chances are good you understand that it’s full of important policies that can be easy to miss if you aren’t an expert. Just understanding the processes completely can be a formidable challenge. The good news is, you can stay in the know by doing your research and putting in the time to understand. If you find yourself too busy to get deeply into the nitty-gritties, you can hire an expert to help you out.

In our last blog, we introduced interchange fees and discussed their benefit to you as a merchant. Interchange covers fees that accrue when a charge is transformed into a cash deposit into your account. We mentioned that interchange is different depending on the size of the charge, but just how does that work?

HOW AN INTERCHANGE FEE IS DETERMINED

Several different factors affect the size of an interchange fee, including the merchant’s industry, the method of accepting card payment, the type of card, and the size of the transaction. To clarify how this works, here are some examples of things that affect interchange:

  • Was the payment entered manually rather than by swipe? The interchange will be higher, because the lack of swipe data increases the risk of fraudulent transactions.
  • Was payment made with a debit card? The interchange will be lower because the transaction isn’t as risky.
  • Was payment made with a rewards card? The interchange will be higher, because it funds the reward program.
  • Was payment made with a commercial card? The interchange will be higher in order to fund rewards programs, reporting, and spending controls.

Now that you have a bit more insight into how interchange fees work, we invite you to contact us and learn more about how we put your interests first. We are proud to stand out among payment processing companies as the best!

INTERCHANGE AND WHY IT’S IMPORTANT

Posted on by tushar

Some business owners are passionate about accounting and they enjoy getting into the nitty-gritty of policy. Other business owners need to hire accountants to make sure their businesses stay on the straight and narrow. Wherever you fall in the continuum between these two approaches, if you own a business, you need to understand exactly how money processing happens. This will help you avoid unpleasant surprises.

WHAT IS INTERCHANGE?

When a customer makes a purchase with you using a card, the bank who gave the customer the card (the issuer) pays you the amount owed. After that, the issuer collects the same amount from the customer’s funds and the transaction is complete. As the merchant, you end up paying the issuer an interchange fee for this service. It doesn’t matter what system you use; you’ll be paying interchange fees if you want to accept card payments.

WHY IS INTERCHANGE IMPORTANT?

  • When a charge is converted into a cash deposit into your merchant account, your back will assess fees for billing services, fraud risk, credit risk, and float. Interchange fees cover all of this at once, which minimizes hassle for you as a merchant.
  • Interchange stimulates growth of card issuers by giving them financial motivation and protecting them risk.
  • Interchange opens up the field for a wide range of merchants by making tailored interchange programs available. By this, we mean small transactions get a lower interchange fee, which makes it possible for merchants to accept small card payments.

At Impact Pay System, we are dedicated to making it easy to run your business. We understand the challenges of being a merchant, and we are passionate about being a close, dependable ally for you. Check out our next blog to learn more about interchange and our credit card processing for small business.