The FALL 2009 ASSOCIATION INTERCHANGE COMPLIANCE GUIDE included over 100 changes, making it one of the larger updates in recent history. Merchants at the same time were switching suppliers with fever, however the new updates won’t really be felt until the November or December merchant statements are reviewed.

The fall rush to change suppliers is most likely a result of the multiple new Visa fees and the MasterCard brand usage fee added this year, which went into effect April-July. Requirements to qualify for specific interchange rates for International interchange programs are outlined. Many larger merchants will see rates approaching or over 3% when all fees are added, for foreign card transactions. For example, MasterCard
COMMERCIAL DATA RATE II = 2.25 %( US Location w/Global Corporate Acquirer Program Support Fee .55%) . (Non US Issued Cards Only.)

Additionally, as previously reported, new requirements are in effect to qualify for certain B2B credit card transactions. B2B Merchants can expect to see effective rates rising above 3% in the card not present environment.

WORLD ELITE RESTAURANT = 2.20% + $.10
HIGH VALUE RESTAURANT = 2.20% + $.10
ELECTRONIC PAYMENT ACCOUNT DATA RATE I = 2.65% + $.10
ELECTRONIC PAYMENT ACCCOUNT DATA RATE II = 2.40% + $.10

The changes this fall continue to expand the need for merchants to work with processors who provide the following:
- Transparent reporting so the merchant can clearly identify interchange rates qualified for.
- Interchange management- interchange continues to grow more complicated and merchants who best control costs will have a payment processor who helps them with interchange management.
- Flexible Technology to manage interchange- this is probably the single biggest growth area in the payment processing industry as merchants need to get away from static systems and move to smart technology with least cost routing solution.

Are there special credit card processing rates for non-profits?

Yes, there are special rates for non-profits. Specifically, there are special INTERCHANGE RATES. In order to qualify for them, you must be on a price plan that enables you to take advantage of them. We call this wholesale or interchange plus pricing. Typically we offer this for merchant accounts processing more than $1 M annually. Interchange plus is what large companies such as Home Depot or Barnes and Nobel pay. It always includes a % of the transaction, a per item fee, Visa/MasterCard dues and assessments, and a merchant discount. Over 95% of your costs are in the % of the transaction, so that is the area that must be controlled or MANAGED.

The most meaningful way to lower your costs is to hit levels of interchange with a lower rate. We can get your non-profit into a program where you’ll hit interchange rates lower than what most retail accounts pay, that is a lower % per transaction. Some of your transactions such as visa rewards cards will process at the same as for profit companies. However some transactions will process at a lower rate, usually at 20 basis points or .2% lower than the lowest rate for profit companies.

In my experience, most non-profits have not been offered these special interchange rates. You can save $2000-$10,000 per million dollars in donations just on this one item. National non-profits typically save 25-50% by implementing my recommendations and services. Which is easier? Finding a donor to give you $100,000 + every year, or calling me one time and saving that much on your expenses every year?

Here’s how you can check to see if you are getting the best rates for your non-profit.

First Look at your merchant statement. Go to the section, usually the last page or two, which shows INTERCHANGE COSTS. Do you have this section? If not, you are not on a price plan that lets you participate in the program.

Second. If you have the interchange cost section, you’ll see things like VISA RETAIL DEBIT, COMMERCIAL DATA RATE 2 ETC. Do you have one that says EMERGING MARKETS OR EMG MKT? If you do not see this category on any of your past statements, you are not participating in the program.

Both conditions are required whether you are accepting donations online or swiping cards for event registrations and auctions.
If you answered no to either question, and your non-profit is processing at least $1 million annually, please call and I will help you keep more donor dollars to use for your organization programs.

Would you like a PDF presentation with actual examples of what to look for on your merchant statement? Call the hotline 954-942-0483 and we will send it to you.

How do I determine my merchant tier? What is my merchant level? Can I get lower rates with a different merchant level?  What are level 4 PCI Compliance requirements? Merchants are rightfully confused about their merchant level, especially small businesses,  because many times I have heard a smaller company say. “We renegotiated our rate. Our processor told us our volume has grown so they moved us up to the next level.”

I’ve never actually encountered a company that met the criteria for ‘lower rates’ based on qualifying for a new level. See the threshold level chart. This is where the confusion starts.

As you can see, only the largest companies qualify for special lower interchange rates and it is based on VOLUME meeting a specific threshold level.  What happens is the salesperson makes up a story to retain the account, or the merchant processor has their own internal criteria that they use to ‘qualify’ a merchant for different rate levels they use. These are not directly tied to interchange, but rather directly tied to the merchant processor profits.

What most merchants need to be concerned about is what level they are required to meet for PCI Compliance because most of them will never qualify for lower interchange tiers. PCI Compliance transaction volumes do not correlate to Visa interchange threshold levels.