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80-90% of your processing statement is compensation to the various card-issuing banks.

The LARGEST part of the fees that make up a credit card processing statement are INTERCHANGE, the fees paid to Visa and MasterCard issuing banks for advancing payment on a purchase to a merchant while accepting the burden of seeking reimbursement from their client (ie: the cardholder.)  *NOTE: for Discover, there is no card-issuing bank, so Discover themselves are paid interchange fees for their cards. Interchange rates NOT a secret- they are available to the public via the card brand websites (see below!)

A simple guide to what determines each interchange rates for a given transaction is as follows:

  • Industry type

    • ie: retail (default), restaurant, supermarket, utilities, eCommerce, automated fuel dispenser (ie: pay-at-the-pump gas stations), hotel/lodging, B2B, etc.

  • Type of card

    • Whether it's a credit card or debit card

  • Card Benefits

    • basic card (no benefits)

    • rewards card (ie: airline miles or "points")

    • signature card

    • corporate card

    • purchasing card

  • Method of card data entry​ 

    • Card present

      • "dipped" (utilizing the computer chip on the front of the card),

      • "swiped" (using the magnetic strip on the back of the card)

      • "touchless" (ie: ApplePay)

    • Card-not-present

      • Card information is key-entered

  • Data submission​​

    • Was the correct data submitted for the type of card presented?​

Historically, the assumption has been that interchange (along with card brand dues, assessments, and fees) was a FIXED COST…and that the acquirer (or processor) markup was a VARIABLE COST. This has led to the commoditization of merchant services, where the perception of services from one company to the next is identical, leaving only cost as a determining factor towards purchase. 

So when a merchant services provider promises you a "better rate", what they are usually doing to lower your cost is lowering their own percentage of the fees you pay each month. However, the mistake many companies often make when looking for credit card processing savings is looking to the markup by the merchant services provider- often the SMALLEST percentage of the fees they pay. Instead of stepping over dollars to pick up dimes. SōBōNet will show you how to find SUBSTANTIAL savings in the LARGEST part of your statement- the compensation made to card-issuing banks. 

(Click on the card brand logo to view that card brand's interchange rates.)

Visa logo
Mastercard logo
Discover logo
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