Interchange Plus Plus (IC++)
Blended Pricing

Interchange ++ pricing is a pricing model that breaks down all the costs of credit card processing into three parts; interchange fee, a card scheme/card associations fee and processing fee.

  • The interchange fee is charged by the issuing (consumers) bank to the acquiring (merchants) bank and varies depending on the type of transaction e,g. card present transaction and the type of card used e.g. corporate card, consumer card etc.
  • The card associations fee is charged by the card providers (Visa, Mastercard) to the acquiring bank for using their systems.
  • The processing fee is charged to the merchant by their payment service provider as a mark-up for their services e.g the use of their gateway.

Blended pricing, on the other hand, lumps all these fees together; including interchange fees, card associations fees, processor charges, gateway way fees and PCI compliance fees. In this model, merchants will only get a collective fee without knowing exactly what those charges include, in many cases, a 2.3%-2.9% + $0.30 fee per transaction.

Benefits of Using Interchange Plus Plus (IC++) Over Blended Pricing.

The transparency of IC++ gives merchants insight into what they are being charged for. For example, if a retailer notices that a portion of its buyers uses debit cards (charged a lower interchange rate than credit cards), they can adjust their marketing to encourage people to use a specific payment method.

With IC++, a merchant can see the separation between the interchange fee charged by their issuing bank and the mark-up charged by their payment processor. This transparency encourages a reasonable mark-up fee from the processor. In blended pricing, a payment processor would charge 2.9%+$0.30 per transaction with an extremely high mark-up and there would be no way of knowing.

Transactions within the UK done using the Visa Immediate Debit Card-standard fee tier, for example, attract an interchange charge of 0.20% while international transactions on the same card have an interchange rate of 1.60%. These cost savings are passed down to the merchant in IC++ while in blended pricing, the payment processor can pocket the difference without you having the slightest idea.

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