That's almost like asking why the sky is blue. We've all seen and heard a lot of simple and slightly-made-up answers to that question. But there are, of course, fundamental scientific reasons that can be explained with a little time and patience.
Titan Merchant Services doesn't like giving "slightly-made-up" answers to your questions. So here's the main principles behind Interchange and how it affects your business.
There are several parties involved in credit card processing.
If you open a merchant account, you enter an agreement allowing a bank to electronically process credit card transactions for you. This “acquiring” bank uses their skills and services to accept card transactions from many different card holders and their “issuing” banks. When issuing banks forward payment to your acquiring bank, they will withhold a small fee, called (can you guess?) an Interchange fee.
Titan Merchant Services does not control Interchange Rates
Interchange rates are established, not by Titan Merchant Services, but by the major card networks like Visa, Mastercard, Discover, and American Express.
Differences in card types, regions, and industry types will determine the cost of Interchanges fees for any given transaction. These fees are deducted as a percent (ranging from .45-2%) + transaction fee (ranging from $0.11- $0.20). Interchange fees are a non-negotiable industry standard.
In fact, the majority of all fees on merchant statements are these non-negotiable interchange fees.
So how does Titan Merchant Service price your account?
Titan Merchant Services decided years ago to price merchant accounts in an honest and straight-forward way. Unless otherwise specified or requested, we use an Interchange Plus pricing structure that only applies a small mark up on top of Interchange Fees. This allows merchants like you to pay an accurate and proportionate amount of rates compared to processing volume.
So there's the truth to interchange. When you see as advertised a single low percent charged as a processing fee, this is most often a markup price to the Interchange Rates. Titan Merchant Services always advertises our Interchange Plus programs clearly and honestly!
Learn more about Interchange Plus and why we offer it as an option to all of our merchants. Contact us today!