What is Interchange?
Accepting credit cards as payment is the act of being pre paid for sales made on card holder accounts prior to the funds have been collected. Client services are necessary to making the payment processing of these loan transactions. These transactions results with a cash deposit in a clients bank account. The "processing bank" collects a percentage and per item fee. This "Interchange" is established by Visa and MasterCard for every credit card transaction.
Complete lists of Interchange pricing are available online at:
Visa website: http://usa.visa.com/clients/operations/interchange_rates.html
MasterCard website: http://www.mastercard.com/us/client/how_works/interchange_rates.html
What is a Visa and MasterCard assessment?
These assessments are the surcharge costs that are collected by the Visa and MasterCard non-profit cardholder associations. The Visa assessment is .0925% and the MasterCard assessment is .0950%.
What are Processing Costs? These are the fees above the cost of interchange and assessment for card authorization, capture of funds, settlement of batches, processing of payments and all other customer related service items.
Common Client Pricing Structures
Interchange, Assessment and processing costs are the three components of all pricing structures. These costs can be structured in different ways by processing companies. "Bucketing" and "Interchange Pass-Through" are the most common pricing structures. ValuPlus has six different pricing structures available. ValuPlus advisors will help select the best pricing structure based on client and company needs.
What is Interchange Pass-through? Interchange Pass-Through is just that, the exact pass-through of interchange and assessment fees; with separate charges for processing costs. The card type (interchange qualification) is determined by the magnetic strip/ credit card number. Currently, there are approximately one-hundred and fifty Visa and MasterCard interchange qualifications.
What is Bucketing? This pricing groups several different card types/costs into one group. The assigned percentage is based on the "average cost" shared between several interchange categories. The groups are given the titles such as "Qualified," "Mid-Qualified" and "Non-Qualified." Each group is assigned one percentage and per item fee to cover interchange, assessment and processing costs.
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