Expert knowledge

Interchange ++ is a method of pricing for Merchant Services that is usually reserved for large corporates, due to its transparency, cost efficiencies and ability to simplify a sector that can be somewhat convoluted. When a merchant processes a payment there are three stakeholders that earn a revenue from the transaction.

1. Interchange – this is the fee that goes to your card issuer – e.g. Monzo, this is capped at 0.2% for consumer debit and 0.3% for consumer credit cards in the EU
2. Scheme Fee – goes to Visa and MasterCard who facilitate the card payment network
3. Acquirer Fee – charge from the merchant acquirer for processing the payment in to the merchants account

Blended Pricing – the high street model
 
The majority of Merchant Banks and ISO’s (Independent Sales Organisations) offer a “blended rate”, which combines all three of these charges into one overall rate, per card type. This method of pricing is difficult for companies to track, as the various card types used in the UK, incur different charges and the margin charged by your Acquirer is not declared in a transparent fashion. Acquirers will have a “blended” margin with higher or lower margin on certain card types. This also allows Acquirers to more easily hide margin increases in to merchant contracts, which we frequently find.

Why is Interchange ++ better?

With the Interchange ++ pricing model, the acquirers margin is declared in a transparent and ethical manner. In this approach, the Acquirer Fee is declared upfront to the merchant with a % + pence margin per transaction that is applied equally across all card types. This makes it a lot harder for acquirers to hide margin increases as merchants only need to look at two figures on their statement rather than keep track of what can often be 100+ charges in the blended pricing model

Other benefits of the Interchange ++ pricing model include:

– No authorisation fees
– No cardholder not present / non qualifying transaction premiums
– No additional acquirer premiums for international card traffic
– Transparent and ethical pricing

Get in touch with Unyfi today to obtain a no-obligation quote and benefit from Interchange ++ pricing

Interchange fee

The Interchange fee relates to the card issuer. For example Santander, Lloyds or HSBC. Card issuers earn a revenue from the “Interchange Fee” when a cardholder makes a payment

Scheme fee

Visa and Mastercard facilitate the card payment network and earn revenue through their “Scheme Fees”

Acquirer Fee

Acquiring banks earn a revenue through the “Acquirer Fee”. With interchange ++ pricing the Acquirer Fee is declared