An Interchange Plus Pricing Structure Can Greatly Reduce Your Credit Card Processing Fees


By:  Gerald Kadish

Traditionally small to mid sized businesses have been set up with what is called multi-tier pricing for their credit card processing. This system is usually set up with three tiers (qualified, mid-qualified, and non-qualifed.) Occassionally, if the business owner has negotiated well, there will be a fourth tier for qualified offline debit cards. While this system has worked well for many years, the increasing number of rewards and corporate cards being issued has made this type of pricing obsolete.

Visa and Mastercard have many different interchange categories for the multiple card types that are issued. Tier pricing takes a large number of these categories and lumps them into one of the three tier buckets available to the merchant. If the merchant only ever takes standard credit cards then this system will work well for them. Once they start to see more debit, rewards, and corporate cards being used in their place of business they will notice that their merchant services bill has increased dramatically. This is because many of these transactions are falling in to the mid or non qualified transaction categories.
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Merchants should accept Electronic Checks

SARASOTA FL – Many merchants won’t accept checks. Most merchants should.

 So says Gino Kauzlarich, President & CEO of, a pioneering provider of electronic commerence and trasaction processing related services.  “The new Check 21 technology is here now where we can quickly scan a check at both the back office or point of sale on a low-cost scanner, screen it against a national “bad check writter” database, and if it clears – electronically deposit it into your merchant checking account as soon as the next day, without you ever having to take it to the bank.” Mr. Kauzlarich says. “It tremendously lowers the risk of taking a bad check, thereby enabling merchant’s to make more sales. In addition, we have an optional Guarantee Program that eliminates NSF checks altogether that costs roughly the same as taking a credit cards”
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More than Half of QSR Gift Card Users Visit QSRs More Often Because of a Gift Card

First Data Corportaion

First Data Competitive Intelligence, in conjunction with Market Strategies International, conducted the QSR Prepaid/Gift Card Study with over 4,000 U.S. consumers in August 2008.

Brief Findings:

51% of QSR gift card self-purchasers and receivers indicate they visit QSRs more often when they have a gift card. Self purchasers visit a QSR an average of 5.6 times per month, while receivers visit less frequently, 3.6 times per month. Three-quarters of QSR gift card users indicate they make additional visits to a QSR at least twice a month because of a gift card.

Merchants who promote gift cards, especially for self-purchase as a spending card, can encourage additional visits to the QSR. While gift card receivers visit less often than self-purchasers, they are still a valuable customer for the QSR. Encouraging gift card reload among receivers is a way to increase frequency of visit.

Fed won’t set Interchange Fees

WASHINGTON — The Federal Reserve said last week it won’t intervene in the growing market of card interchange fees, now as much as $30 billion a year.

A Fed official said the United States’ central bank should not get involved in the conflict going on between the two major card companies, Visa USA and MasterCard International, and the merchants. (Read also, Interchange wars: Merchants tug networks for change.)

The Fed also concluded it doesn’t have the legal authority to set interchange rates under the Electronic Funds Transfer Act.
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