What are Interchange Fees?

Credit CardsInterchange fees account for the majority of credit card processing expense, and a familiarity with interchange is vital knowledge for any business owner or manager. Interchange is the cost of the money transferred from the acquiring bank to the issuing bank for each bankcard transaction. These interchange fees are established by the card brands (Visa, MasterCard, Discover, JCB, Union Pay).

Interchange fees for the two largest card brands may change twice annually in April and October. The interchange fee schedules for Visa and MasterCard can be found here:

Here is an infographic from the Strawhecker Group that illustrates an explanation of what merchants pay to accept credit cards, why it’s paid, and the benefits provided to merchants and consumers:

At BCMS, we guarantee the lowest processing rates in the industry, so you never have to worry if you’re paying too much for processing. We offer a cost-plus pricing structure which is the basic interchange rate plus a few basis points to cover our services. To lessen the impact of interchange fees, you may follow this guide:

Interchange Qualification

A number of factors are used to determine where a transaction qualifies at interchange. Some of these factors can be controlled or influenced by the merchant while others can’t.

Factors that merchants can influence include:

  • Processing method: Card-present and card-not-present are the terms used to generally refer to the different ways of processing a credit card transaction. Card-present interchange categories carry smaller fees than card-not-present categories.
    • Card-Present: Card-present transactions are those where a merchant actually swipes a card through a terminal or by an imprinted and signed credit card draft.
    • Card-Not-Present: Card-not-present transactions (CNP, MO/TO, Mail Order / Telephone Order, MOTOEC) are made where the cardholder is not physically present with the card at the time that the payment is effected. This situation is most common for internet, mail-order, or fax transactions and is a major route for credit card fraud.
  • Transaction data: The information supplied with a credit card transaction impacts how it qualifies at interchange. Proper and complete transaction data is especially important for merchants that process card-not-present transactions and for those that deal with corporate and government enhanced data.
  • Merchant Category Code: Specific interchange categories exist for businesses that fall under a certain merchant category code (MCC) designations.

Interchange qualification factors that a merchant can’t control include:

  • Card Type: Separate interchange categories exist for credit and debit card charges.
  • Card Brand: The brand of a bankcard will impact interchange qualification. This criterion is typically associated with credit cards that yield some type of reward for the cardholder.
  • Card Owner: Whether a credit or debit card is issued to an individual, business, corporation or municipal agency impacts interchange qualification.

The extent to which interchange can be optimized for your business depends on several variables. To learn more about interchange fees, please contact us today.

Mobile Payment News: Starbucks’ Square Roll Out a Flop

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Incase you haven’t heard, Starbucks recently deployed Square at about 7,000 coffee shops with the intention to help customers pay with debit and credit cards. Last year, Starbucks announced its wide-ranging agreement with Square to have it handle the company’s debit and credit card payment processing; additionally, Starbucks invested $25 million in the payments startup. The promise of paying with Square is that it offers merchants and customers a better user experience. The expensive deployment has been a bit of a flop. Baristas and customers alike are confused by Square. Tests demonstrated that even when baristas worked out how to accept Square payments, they were unable to scan the Square Wallet app from their barcode readers, and resorted to holding the customer’s smartphone and manually entering the barcode number into their register.

Rather than resorting to a inferior mobile payment solution like Square, consider employing one of BCMS’ fantastic mobile payment solutions. With our mobile solutions, we can provide you with a wireless terminal so you can take payments anywhere or we can set you up to take payments directly from your smartphone. Accept credit card payments and increase sales no matter where your business takes you.

BCMS Mobile Payment Solutions

As a merchant, the benefits of mobile payment acceptance are colossal. You have access to online transaction reports, which provide a better understanding of your consumer’s behavior and information on how to better service their needs. You empower your customers by allowing them to pay with their preferred method and funding mechanism, while increasing flexibility at the register and the speed of checkout. With our mobile solutions, the ultimate benefits are the enhanced data security and the reduced cost of processing.

With more than 6 billion mobile phone subscriptions globally, mobile processing solutions are more important than ever before. Stay on the forefront of technology with BCMS Mobile Solutions.

 

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Recharge Your Business in 2013

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It’s the start of a new year. The holiday rush has come and gone, and now is the perfect time to evaluate last year’s successes and failures. Reflect on last year’s market. Did your business grow? How can you improve? Learn so you can evolve in 2013.

  1. Get your priorities in line. Create a list of everything you need to get done. This can range from short-term goals (clean and organize) to long-term goals (expand your business). After you create your list, assess which tasks are the most important. Rank your goals/tasks to help with time management.
  2. Shut down non-profitable parts of your business. Determine the money makers and the drains on your resources. If you aren’t sure, talk to your accountant.
  3. Increase monthly cash flow. Sounds easy, right? This is the goal of every small business. Take a look at your fixed and variable costs. Where can you make cuts? BCMS can provide you with low rates on credit card processing. Additionally, our division, Certified Utility Services, can reduce your utility rates. Two easy ways to cut costs.
  4. Take a chance. It’s 2013. Now is the time to take that chance to grow your business. Do you want to purchase new equipment, hire more employees, expand into another storefront? We can give you the funding you need to push your business forward. You can receive $5,000-$500,000 from our Merchant Cash Advances.

Good luck! We wish you success in 2013!