What is Interchange Pass Through?

Interchange Pass Through refers to a specific type of pricing applied to a merchant account. It is based on Interchange rates. Interchange is the wholesale rate that banks charge each other to process credit cards.

A merchant’s goal is to pay as close to interchange price as possible.

Interchange rates are set by the credit card associations and consists of a long list of different percentage and transaction fees. The difference in fees are based on risk factor such as: credit card brand, type of credit or debit card, type of transaction, i.e. online, in-store, phone order, and category of industry and the size of the organization accepting the credit card transactions.

Merchant Account providers are given the option to set their rates how they see fit, using the Interchange as their wholesale “floor”. Some merchant account providers will use a “tiered” system to charge their clients. This may often seem less complicated at first glance, but the reality is if the rates are averaged out, it is the merchant who pays the higher average.

Merchant account provider using the Interchange Pass Through pricing structure will charge the actual Interchange rate with a small percentage added.

Benefits of using the Interchange Pass Through Pricing Structure:

• Full Disclosure
• True Cost
• Lower Monthly Outgo
• No Hidden Fees

While interchange pass through is the least expensive type of merchant account pricing, it’s also the hardest to get. Many providers only offer tiered pricing while others are only offering Interchange Pass Through Pricing to established merchants. At 1st Advantage Merchant Service New Jersey, we provide Interchange Pass Through Pricing to all our clients.

Examples of 2009 Interchange rates for Visa MasterCard

• Retail
• Restaurant
• Card Not Present
• eCommerce
• Public Sector
• Supermarket
• Gas Station
• Hotel

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