Interchange Plus, or IC+, is an alternative pricing model for merchant accounts, traditionally preferred by those with higher processing volume.
Payment providers, such as Bambora, are charged an interchange fee by the card brands (Visa, MasterCard, or AMEX) for every transaction processed. This interchange is set by the card brand, and every payment provider pays the exact same fee.
IC+ pricing passes that exact fee from the card brands with a minimal markup, maybe 40¢ or 60¢ to the merchant.
Why does interchange differ?
The interchange can differ based on card type, region, and locale of the card owner.
- Visa will have a set interchange fee for their basic card, another for their rewards, or travel card.
- Visa will also have a different interchange fee for each of those card types based on country, Canada vs. America vs. the United Kingdom.
- Finally, Visa will charge a higher fee for cards used in different countries. If a customer is visiting Canada on a vacation from Italy, the card is ‘foreign’ and will have a higher interchange fee.
Examples of Interchange Pricing
For a US Standard World Elite MasterCard in USD the interchange is
3.25% + 0.10 (set by MasterCard) + .60¢ (the markup by the payment provider)
For a US Charity MasterCard in US the interchange is 2.00% + 0.10 + .60¢
Note: the additional fee of 60¢ can differ based on your processing volumes and is simply used as an example.
That seems complex, is there an alternative?
While this can seem confusing, it can potentially save merchants money in fees. The alternative is a blended or fixed rate.
A blended rate takes all these fees and blends them into one. This means you pay one flat fee, instead of potentially paying a different fee on each transaction. So no matter the type of card your customer is choosing to pay with, you pay 2.8% + 30¢.
Blended rates are great for lower volume merchants who don’t want to deal with multiple fees. IC+ can save you money if you have high processing volumes and understand your card breakdown.
If you are not sure which pricing structure is right for you, you can contact our sales team. Better yet, we can grow with you. You can start at a blended rate and as your business evolves we can seamlessly move you to an IC+ structure. We are Your Partner in Payments, helping you get the best rate for your business.