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Credit Card Fees

tuning your interchange fees to reduce cost

2:33 pm on Apr 5, 2011 (gmt 0)

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joined:Sept 7, 2001
votes: 0

time for my annual credit card fee review.

i use cost plus. i am currently paying about .4% premium over interchange fees to my processor (although i have a proposal from another processor to cut that in half). my volume is about $500k/month.

so, even though we think of the actual interchange fees as set in stone, it appears that there is some latitude here. i have discovered that most of my mastercard transactions are settling at an interchange of 1.89% + $.10 - this is for standard consumer credit core value cards (awards and business cards are higher) - the notation next to these charges is "key-entered" - this means that, being an internet merchant, i don't have the physical card.

but wait, looking through the 135 page "mastercard US and interregional interchange rate programs" (yep, you can search that and grab the pdf for reference) schedule of fees, there is one called "merchant ucaf" that costs 1.58% + $.10 - it says it is for internet transactions and the criteria is "magnetic stripe data not required and electronic commerce identifiers must be present".

so, most of us should be getting this interchange rate, right? well i have been through numerous calls and emails with my processor and the first thing i have learned is that i know more about this than most of them. somewhere between my "merchant category code", my gateway and my processor, i am getting downgraded to the key entered rate. i am determined to fix this, so i'll report back.

in the mean time, i'd love to hear what rates others are paying or any thoughts, war stories etc.
3:29 pm on Apr 5, 2011 (gmt 0)

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10+ Year Member

joined:Aug 21, 2001
votes: 0

.2% premium over interchange sounds fair given the volume that you are doing. If you can grow your volume to about $1mil a month, I would push for around .05% premium. Usually rate shopping with other companies is the best way to get the fees down. Costco used to offer a great rate. Another to check is Litle.

Also, based on your volume the rate here is .09%. [naccadirect.com...]

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