I’m sure that as an owner of a business, there’s plenty to be doing without being able to work out the way Credit Card Interchange Fees work. The good thing is that it’s not as complicated. There is a myriad of interchange fees. What’s important to be aware of is that interchange is the wholesale price that banks pay each other in order to complete a credit card (or debit card) transaction. It is the cost associated with operating a business, which is usually about 2 percent of the transaction value.
While the card companies determine rates for interchange, there are some things that you could do in order to avoid paying too much.
Review Your Charges Annually
Every year, at least twice (generally in the months of the month between April and Oct), Visa and MasterCard review their procedures regulations, fees, and procedures. They then announce rates changes and new prices. A lot of times, your current provider will add rates that are higher than that of Interchange adjustments. Contact another provider, or transmit your merchant statement and ask for an analysis of your account in order to “catch” these rate rises.
Use an Interchange Pass-Through Program
To pay the least amount of fees when processing credit card transactions, it is the aim of a business to deliver the closest interchange is possible. A merchant account that utilizes the Interchange Pass Through pricing method adds processing fees in the form of adding just a tiny amount of the actual exchange rate for each transaction. All prices and assessments are passed through at the cost. This means that you will only pay the real interchange rate and not an additional mark-up which is paid to the Merchant Service Provider. A lot of times, your current service provider will apply other rates above those Interchange adjustments. Make a call to another provider, send a send in your merchant statements, and ask for an analysis of your account for the purpose of being able to “catch” these rate rises.
Avoid Downgrades Whenever Possible
A downgrade happens when a transaction has an amount higher than what your business could qualify for. When you can, always swipe your credit device at point-of-sale to prevent fraud and get the lowest rate. If you run a repair or service company, consider investing in an online processor for credit cards or consider some of the more recent solutions like RoamPay and PayWare mobile that allow the use of your mobile phone as a point-of-sale device.
Obtain the Correct Billing Information
To avoid being downgraded due to Card Not Present Transactions, Always obtain the correct bill information for the card to be used. Credit Card Companies use an Address Verification Service (AVS) for domestic cards to verify whether the billing information you input matches that of the Card you entered. Always keep the billing address of the card, including the Postal Code and your Card’s Verification Code. This is the three-digit number located at the bottom of the signature panel on the reverse of the card. This is applicable to Visa, MasterCard, and Discover. If you have an American Express, it is the four-digit number that appears on the front right-hand side of the card, above the five digits that make up the number on your card.
Check to ensure that the Point of Sales Devices is programmed Correctly.
When your point of sale device isn’t prompting you to input billing Address details in addition to the Card Code, Make contact with Your Merchant Service Provider right away to have your device updated to allow you to send that information on to the Credit Card Companies. Another way that transactions could be degraded is if you fail to process or settle all transactions within 24 hours after receiving an Authorization. Nearly all devices at the point of sale are able to automatically determine or close at a specific date and time every day. If your device doesn’t include this feature and you are not sure, call Your Merchant Service Provider immediately to update your program.
Train Your Staff
If you’re not the sole person accountable for the processing of credit cards in your business, it is essential to properly educate your employees to ensure that they do not suffer the possibility of downgrades. Constantly monitor your cashiers, track transactions, and closely check your month-end processing reports.
