Interchange is the wholesale price that Visa and MasterCard charge for the authorization and settlement of credit card transactions.
Although it is extremely complex, comprised of roughly 125 categories, it is the foundation of the credit card processing industry.
The three factors that determine rates are Industry Type (fitness, hotel, convenience), the type of card processed (rewards, business, corporate) or how the card is processed (swiped, or keyed in, etc.).
Because there are so many categories, most processors will bundle the rate into three groups: swiped, hand keyed and non-qualified (basically everything that doesn’t fall into the first two groups!).
A bundled rate is usually the only option offered to the average merchant or small business. With an Interchange Plus model you have more to gain because you are getting pure cost.
It’s no secret that the processor (as well as the business owner) has to make a profit. With an Interchange Plus program, you know what you are paying because it is based on actual cost plus a small percentage on all card types no matter what category they fall in.
