What is Interchange?
Being able to accept credit cards is a vital part of a
merchants’ business today, and there is a cost associated with
doing so. The cost of running a credit card, known as interchange,
is passed by the card brands. Interchange fees have a direct
correlation with how cards are being accepted. To be sure you are
being charged the lowest rate possible, you want to make sure your
transactions are optimizing.
How does Interchange Optimization Help My
Interchange optimization means obtaining the best rates for
business to business (B2B) or business to government (B2G)
purchases by passing all information about each transaction. Some
of these factors can include transaction size,
processing method, card type, and merchant industry. For the
best chance of achieving this optimization, you need to send as
much data as possible to the card issuer. The reason behind this
logic is fairly simple â the less information passed, the higher
the risk the transaction becomes.
Do I Qualify for Interchange Optimization?
The first thing to ask yourself when reflecting on this question
is what type of customers/clients you work with primarily. They
need to be using B2B or B2G cards to qualify for interchange
optimization. Next, the best way to ensure you are hitting
Level 2/Level 3 rates is by using a gateway
that supports it. If you are not sure, call your gateway to find
out. Finally, you need to find out what type of pricing structure
you are on. If you are on a flat rate, tiered rate, or billback,
you may not be receiving the lowest rate possible. If your
transactions are optimizing, the âinterchange plusâ pricing
model, otherwise known as âcost plus,â would ensure you are
getting the best rates.