How do I Calculate Fees with Interchange plus Pricing?
To calculate fees using the interchange plus pricing model, you must combine three distinct components for every transaction: the base interchange rate, card network assessments, and the processor’s markup.
Follow these steps to perform the calculation:
- Determine the Interchange Rate: This is the percentage set by card networks (like Visa or Mastercard) based on the card type and transaction method. For example, a restaurant credit card transaction often has a rate of 2.2%.
- Add Network Assessments: These are small fixed fees charged by the card associations, typically averaging around $0.10 to $0.21 per transaction.
- Apply the Processor Markup: This is the fixed fee added by your service provider. At The POS Brokers, this is typically a small percentage (such as 0.20%) plus a consistent per-transaction fee (such as $0.10).
Example Calculation for a $100 Restaurant Credit Transaction:
- Interchange (2.2%): $2.20
- Assessments: $0.10
- Processor Markup (0.20% + $0.10): $0.30
- Total Fee: $2.60
This model is considered highly transparent because it itemizes each cost, allowing businesses to see exactly what they are paying rather than charging a single bundled rate.
Related FAQs
-
What is a Cash Discount Program with a Merchant Services Provider?
Read More »: What is a Cash Discount Program with a Merchant Services Provider?A cash discount program is a payment solution that allows business owners to offset their credit card processing costs. With this program, the business displays a cash price for its goods or services. When a customer chooses to pay with…
-
What is the Difference between a Merchant Services Provider and a Payment Processor?
Read More »: What is the Difference between a Merchant Services Provider and a Payment Processor?A merchant services provider delivers a comprehensive, end-to-end payment solution. This includes supplying POS hardware like terminals and card readers, setting up and underwriting merchant accounts, providing ongoing support, and offering transparent pricing models. They act as a full-service partner…
-
Can a Merchant Services Provider Help Me Accept Credit Cards Online and In-store?
Read More »: Can a Merchant Services Provider Help Me Accept Credit Cards Online and In-store?Yes, a merchant services provider can help you accept credit cards both online and in-store. These providers deliver end-to-end payment acceptance, which includes supplying necessary hardware such as POS terminals, card readers, and accessories for physical locations, as well as…
-
How do I Switch Merchant Services Providers without Downtime?
Read More »: How do I Switch Merchant Services Providers without Downtime?To switch merchant services providers without experiencing downtime, follow this migration checklist: Sign your new merchant agreement to have your account configured and assigned a dedicated support contact. Request the porting of compatible terminals; if you are currently using eligible…
-
What should I Look for in a Merchant Services Provider for my Small Retail Business?
Read More »: What should I Look for in a Merchant Services Provider for my Small Retail Business?When choosing a merchant services provider for your small retail business, you should look for a partner that prioritizes transparent pricing, hardware flexibility, and responsive support. Key features to evaluate include: Hardware Options: Seek providers that offer free or discounted…
