What interchange is
- Interchange is generally paid through the acquiring side of the transaction to the card-issuing bank.
- Rates vary by card network, card product, merchant category and transaction characteristics.
- Consumer rewards cards, commercial cards, ecommerce transactions and keyed transactions can qualify differently.
- Processor markup is separate from interchange and should be evaluated independently.
Why transactions qualify differently
- Card-present versus card-not-present entry method can affect qualification.
- Missing required transaction data can cause some transactions to downgrade.
- Late settlement or inconsistent capture behavior can affect certain qualification categories.
- Commercial cards may require Level II or Level III data for more favorable eligible categories.
Ways merchants may reduce avoidable cost
- Use the correct payment method for the transaction environment instead of keying cards unnecessarily.
- Settle transactions on time and review batch procedures.
- Capture accurate AVS, tax, customer and commercial-card data where supported.
- Confirm the gateway and processor actually transmit the fields your system collects.
- Review transaction-level reports to identify recurring downgrade patterns.
Separate interchange from processor markup
- A lower quoted rate does not always mean lower total cost.
- Interchange-plus pricing can make processor markup easier to identify.
- Monthly statements should be reviewed for network fees, processor fees and qualification changes.
- A useful analysis compares effective cost by card type and transaction category, not only the monthly average.
Use data before changing processors
- A statement review can reveal whether cost is caused by interchange, processor markup, transaction behavior or missing data.
- Technology limitations may matter more than the processor name when the gateway or software drops important fields.
- The best first step is to identify where cost is occurring before making a system change.