Merchant Services: Interchange Pass Through Rates

About a year ago I started working with Cart32’s merchant services clients. This was a whole new world for me – I knew the purpose of a merchant account, but I really didn’t have a clue how a merchant account actually worked. I quickly became familiar with the ins and outs of merchant services. One of the most valuable pieces of information I learned was that merchant services companies have the ability to make things look great on paper, but in reality it doesn’t really work that way…


Merchant services providers always try to win you over by their “low rates.” What you should be really looking at is what type of account they are providing you. One of the best accounts that you can be setup on is called Interchange Pass Through. Interchange pass through will give you the ability to get the best rates possible and also gives you a detailed synopsis of how your transactions were processed.


What is interchange pass through?
Interchange pass through are rates set by Visa, Master Card, and Discover. Each entity has their own set of rates, but you can see their rates online be following these links:


As you can see there are hundreds of different classifications that your transaction can process through. Do not let this scare you. Once you receive a couple of statements you will see that only a few classes apply to you. Interchange pass through also gives you the ability to see what Visa, MasterCard, or Discover charges you and then you can compare that to what your provider is actually passing through to you.


Why should I choose Interchange Pass Through?
Interchange pass through gives you the ability to see how each and every transaction was processed. When you have an alternative pricing structure you do not have this ability. Tiered pricing for e-Commerce businesses will lump transactions into two categories Mid-Qualified (2.17% Cart32 pricing) or Non-Qualified (3.17% Cart32 Pricing).


For example, if you have a customer processing a transaction with their debit card on your website and you have Cart32’s merchant services you will pay around 2.17% to process that transaction. However, if you have interchange pass through you will process around 1.60% + $0.15. That is a savings of .57% for one transaction! 


How do the Merchant Services providers make money on these accounts?
The Merchant Services providers have the ability to add a “mark-up” to all transactions. These mark ups are called basis points. Cart32 provides interchange pass through accounts with a .0035% mark-up, which translates into 35 basis points. You will want to make sure that your merchant services provider is competitive with their basis points or mark-up rate.


I highly encourage all of you to take a look at your merchant services statement to see how you are currently processing and become familiar with how your merchant account is set up. If you notice that your rates are high, it is time to start negotiating with your current company or to find a new company. If you are interested in learning more about Cart32’s merchant services click here for more information.


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