What are Interchange Fees?

Interchange fees Y2Payments

If you are a business that accepts credit card payments, there are fees you could be overlooking, and they may be costing you more than you think. They’re called interchange fees, and if you don’t understand exactly how much you’re paying each month to processors for these fees, you may not know where all of your profits are going.

A Definition
Interchange fees are essentially what a credit card sale is costing you. Any time you process a credit card sale with a customer, you’re paying a fee to do so. Take a moment to consider who is involved in a credit card sale.

First, there’s the merchant service provider – that’s your bank or financial institution. The financial institution that issues the card is the second party involved. That’s the company who actually issued the customer a card.

The last party involved is the credit card company behind the card itself like American Express or Visa. They set the interchange rate itself. For every card issued, a pre-set rate is also issued for merchant service providers to pay the bank that issues the card. That rate determines those fees that are costing you so much money.

Cards with points, airline miles, rewards, and so on have higher interchange rates. Debit cards tend to have lower interchange rates. The way you process a card also affects those rates. Swiped sales tend to have lower rates associated with them than online sales do. The important point to remember, though, is that the interchange rates set by the card company apply to every single merchant, even the smaller ones.

Lowering Your Rates
So, how can you keep those costly interchange fees in check? Work with us. With more than thirty years of payment processing experience, Y2Payments can help you save some of that money from your current statements and have it go directly to your bottom line! Contact us today to learn more.