I'm extremely pleased with this opportunity to write for your publication. … I can guarantee that The Green Sheet will be on my lips anywhere my articles are. Just yesterday I was telling someone that you're the WSJ of our industry.
Ben Abel Bank Associates Merchant Services Current co-Author of Street SmartsSM
Thank you for your encouraging note. We are delighted with the articles you and Tom Waters have contributed thus far this year, and we appreciate that you are letting others know about the work we are doing to help ISOs and merchant level salespeople succeed in the fascinating business of payments.
Is the merchant discount rate the same as interchange? Pricing is so complicated for me as a new agent; I don't know how I’m going to explain it all to merchants.
George Vallant Merchant level salesperson
Interchange and the merchant discount rate are not the same. Interchange is, however, one of the fees that comprise the discount rate. Other fees included in the discount can be startup, equipment and processing costs, as well as a percentage of each sale made with a debit, credit or prepaid card.
Among the factors affecting interchange are merchant category code, merchant transaction volume, type of card a customer uses to initiate a transaction, and whether or not a card is physically presented by the consumer at the POS. Card-not-present transactions, for example Internet and MO/TO orders, typically have higher interchange rates than card-present transactions such as those made at brick-and-mortar establishments.
For background information on this topic, please search our archives for the terms “interchange” and “merchant discount." Your ISO, regional acquirers associations and industry tradeshows are additional educational resources. We’ll also continue to cover the complexities of merchant pricing because payment businesses have distinct ways of structuring merchant contracts, with varying degrees of success.
What’s on your mind? Are you happy with the way your ISO handles pricing? How about the products and services in your MLS toolbox? What topics can we cover that will really help you in your career? Email us at email@example.com.
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