Interchange Plus Pricing Overview

What is Interchange?

It’s the underlying cost of a credit card sale. There are many entities involved whenever you process a credit card transaction. First, there is the acquiring bank, who Dharma represents. Dharma and other MSPs are referred to as Merchant Service Providers. As you will discover merchant services are varied, but the MSP always represents you, the merchant. Secondly, there is the card-issuing bank. The card-issuing bank represents the customer, and is the bank who physically issued the credit card to the customer who’s paying you. The final entity is the credit card association, such as Visa, Mastercard, or Discover. They are responsible for setting the rates at which these transactions process.

For every credit/debit card that exists, there is a pre-set rate that the MSP pays to the issuing bank. This is often referred to as the Interchange rate, credit card Interchange rates or Interchange pricing. You will discover Interchange rates correlate with the cost that each bank has for these cards. Typically, cards with more “perks” or “extras” will have higher associated Interchange rates, because the card-issuing bank has additional costs to recoup. (Think rewards, points, or airline miles). Other cards are very cheap to process, and thus, have lower Interchange rates. (Think debit cards – this is essentially taking money from a checking account, and are low-risk transactions for a bank). Interchange rates will also vary based on how the card is physically accepted – there are lower rates for swiped/dipped sales, and higher Interchange rates for keyed/online sales. These Interchange rates apply to all Merchant Service Providers, from the largest providers to the smallest. We all have the same Interchange costs.