So you were told your Visa and MC rate is around 2% but when you divide the cost of processing by the amount of Visa and Mastercard transactions, you come with a number well above 3%. This is likely due to being downgraded to a more costly interchange level (more on interchange below).
Reasons for interchange downgrades may include:
- The type of card (rewards, corporate, etc.)
- The way it was entered (swiped, hand keyed, online)
- The data captured and transmitted along with the transaction
For office environments, where payments tend to be processed without the card present, it’s critical to recognize that downgrades can make up to half of the total processing fees. These downgrades can be virtually eliminated with a few simple adjustments to how you accept cards.
The founders of FRP recognize that when you run an enterprise you can’t be an expert in everything and you rely on your service partners to have your back. If your current provider has not shared information on interchange optimization (downgrade management) then you are likely paying for a level of service you don’t need and are not required to pay – kind of like paying for a first class seat and flying in coach.
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For more on Interchange see:
https://en.wikipedia.org/wiki/Interchange_fee
For the latest schedule see:
Visa’s interchange reimbursement fees
MasterCard Interchange Rates and Criteria