Video: Interchange rates impacted by people & payment gateway

Merchant payment gateway choice impacts merchant fees. Managing credit card interchange rate qualification is critical to profits.

Transcript: Rising merchant fees impacting profits? Meet Joe, a CFO. The problem is rate qualifications. The system is too complex.

interchange rules

It’s impossible follow the rules without an automated system.

Employees can influence costs.

interchange rate qualification

The same transaction can process at different rates, depending on which rules you follow.

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Author: Christine Speedy. “Managing interchange rate qualification is virtually impossible without a technology solution.  The right payment gateway selection is critical to merchant success and managing fees with any merchant account.”

Expanded information about this subject: Problems with other payment gateways:

Retail swipe

Bob swipes the card on Virtual Terminal A, enters the amount and submits. ALERT: enter sales tax. (type in or enter to skip). If the extra info is entered, the transaction qualifies for Commercial Data Rate II 2.10%, if skipped, it’s 2.65%. (Most virtual terminals CANNOT support level III on swiped transactions.)

Bob swipes the card on Virtual Terminal B, enters the amount and submits. ALERT: Submit level 3 data. (This data has been prefilled with the transaction information and additional data stored in a template.) One click later and the transaction qualifies for Commercial Data Rate III or Large Ticket if a qualified large sale amount.

Moto (mail order / telephone order

Bob key enters a transaction on Virtual Terminal A and submits. After the sale is completed, an ALERT appears. You can lower your rate if you complete the next two steps. Do you think Bob ever skips the next steps because he’s busy or interrupted? You bet.

Bob swipes the card on Virtual Terminal B, enters the amount and submits. ALERT: Submit level 3 data. One click later and the transaction qualifies for Commercial Data Rate III or Large Ticket if a qualified large sale amount.

These are some simple examples. But there are many more complex rules for all sorts of different card types and transaction types. Most virtual terminals have no intelligence to help merchants with interchange rate qualification. Merchant account payment processor reports have also improved with reports for ‘non-qualified’ transactions. They’re not entirely accurate. For example, commercial data rate II is a qualified rate. However, commercial data rate III is better. Will any report tell you if there were transactions that could have processed at an even lower rate? While several of the big ones have improved, they’re still a long way from automating interchange optimization.

If you want peace of mind, instead of pouring over reports, an automated solution for interchange management is critical.