Interchange fees are the costs merchants pay to their payment processor when customersshop using a credit/debit card. Interchange fees affect the overall cost of operating your business. This is especially true of the retail sector, specifically, eCommerce, or brick and mortar. Let’s dig deeper into the topic and see where you can obtain the best merchant accounts.
Each time customerspurchase goods or services via a credit or debit card, you need to pay an interchange fee. The latter is also called an interchange reimbursement fee or interchange rate. The average interchange fees account for about 0.3-0.4% of the transaction amount in Europe and 2% in the US.
So, the so-called interchange rate is the fee that the merchant must pay the processor for every credit/debit card transaction. These fees are also known as swipe fees.Think of this fee as the rate paid in return for accepting the credit risk and for the charges associated with credit card transactions.
However, payment processors aren’t the only companies charging these fees. Sometimes, banks or credit unions also require merchants to pay interchange fees. Interchange fees aren’t the same with all card issuers, transaction types, and merchant industries.
Interchange Fee Reduction&Best Merchant Accounts
Every year, acquiring banks and merchants lose billions of dollars because of interchange fees. Online retailers don’t like to see potential profits deducted from a sale. However, the net gain from accepting credit or debit cards outweighs the interchange fee costs. All merchants are interested in how they can reduce or get rid of interchange fees. Let’s see how:
- Stick to accepting cash or checks.
- Get your customers to usedebit cards.
- Consider using an address verification service (AVS).
- Don’t postpone transaction settlement.
- Don’t leave out the customer service information from transactions.
- Switch to swipe transactions from manual entries.
With all the tectonic shifts taking place in payments, it’s more vital than ever to work with a reputable payment company to best handle your transactions. For this, you just need to turn to a payments comparison expert that can help you find the right merchant processing services, including the best merchant accounts. Make sure the comparison specialist is particular about terms, complaints, and integration processes of merchant services providers.
The Impact of Interchange Fees on Your Business
Card-issuing banks charge merchants interchange fees for credit/debit card payment processing.Interchange fees are among the most essential types of card processing fees that merchants are required to pay.
Author Bio:Payment industry guru Taylor Cole is a passionate payments expert who understands the complex world of the best merchant accounts. He also writes non-fiction, on subjects ranging from personal finance to stocks to cryptopay. He enjoys eatingpie with ice-cream on his backyard porch, as should all right-thinking people.