MasterCard interchange rates and criteria update April 2012

MasterCard updated their merchant interchange rates and fees portion of their web site. It’s a useful for all merchants. The missing link to all this data however  is a clear identification of which transactions are qualified and which ones are not.  For example, if a merchant is on Interchange plus pricing, it lists all the interchange rates the merchant paid. But it doesn’t indicate which ones are qualified and which ones downgraded to a higher rate. Some processors provide this information, with a section call ‘non-qualified’ transactions, however, the software frequently shows transactions as non-qualified that truly are the best qualified rate that a merchant can receive.

As a merchant I would want to know which rates are the best possible for a given card type at a glance. Why should a merchant have to hunt through hundreds of pages to figure it out? Interchange is not getting less complicated. Our team offers merchants an automated solution to qualify transactions for the best interchanges rates. Contact us for details.

3D Merchant maintains a list and links of all official interchange rates here.

Verifone Omni 3740 and Omni 3750 end of life 2012. What should you replace a multi-merchant terminal with?

The Omni 3750 is a multi-merchant capable machine, often used by businesses that had one account for retail and one for MOTO. Before jumping into the next dial up or even IP multimerchant terminal, it’s time to review the related credit card processing landscape. The primary purpose of separate retail and MOTO merchant accounts has been to help larger merchants qualify for lower interchange levels for each type of transaction. This method has historically been particularly important for wholesale suppliers in the construction industry that have a storefront, plus a base of commercial accounts, most of whom do not pay at the store. Without two merchant accounts, the cost of card not present transactions cost up to 1.05% extra on a retail account.

INTERCHANGE QUALIFICATION CHALLENGE: Proper presentment of transactions regardless of method of entry (key entered or swipe) or card type (different requirements for data to submit). Proper presentment is getting more complex as regulations are changing more rapidly in the past and the card networks & card issuing banks are creating new rules making it harder to qualify for the best rate for any given card type. For example, our internal spring bulletin explaining fee changes was 32 pages long versus a more typical 2-3 pages.

ADDITIONAL CONCERN: New Fixed Acquirer Network Fee (FANF). Visa’s Card Present Fee is fixed based on the number of locations. For Card Not Present (CNP), the fee is based on monthly sales volume, and is much higher than card present. Each merchant account is counted as a location. EMV (contactless) is mandated for all merchants by 2015; Visa is offering incentives to merchants who implement beginning in the 3rd quarter of 2012.

ANALYSIS: It is my firm belief that it will be impossible for merchants as described above to continue to qualify for the best interchange rates with standard dial up terminals because of the continual need to identify needs, update programming and train employees. A manual process just won’t work. As an interchange expert, even I can’t keep up with the rules to manually oversee merchant accounts without an automated system.  A host based solution is the only viable long term solution for merchants who want to control fees.


If you want to stick with a multi-merchant terminal:

  • FD300 TI (PCI) Dual Com, First Data only, $499
  • FD300 Wifi (PCI), First Data only, $695
  • Other brands may be available, check manufacturer web sites for current models.

For a host based solution:

  • CenPOS virtual terminal with automated switching. With a single merchant account, CenPOS will identify the card issuing bank, requirements needed to qualify you for the lowest interchange for that card, and automatically present properly as retail or card present with all the right data. Benefits:
  1. Interchange optimized, employee mistakes eliminated
  2. Single merchant account- potentially reduce statement fees, regulatory fees, PCI compliance fees, and higher CNP FANF fees
  3. Always current with latest federal and state regulations


Limitations:  As of this writing, EMV is not yet approved on CenPOS, but is anticipated by July 1 when Visa’s incentives begin; hardware manufactures are still working out reliability issues with some new models.  In the interim, merchants may wish to use inexpensive secure card readers for low transaction environments, or older model signature capture units that will have to be replaced at a later date.
magtek card reader



Terminal that selects the best rate for interchange fees- interchange and level 2 data review

Merchants must understand interchange in order to understand why credit card processing fees can vary with the same bank issued card from one transaction to the next.  The cardholders financial institution remits to the merchant financial institution (merchant processor) the transaction amount, less the interchange rate. The interchange rate may be a directly negotiated rate between the bank and the processor or it may be a default rate set by Visa, Discover or MasterCard.

When the rate is created, there are stipulations or criteria to qualify for the rates. For example, the rate applies if x, y, and z are present. But if only x and y are present charge a higher rate. If only x is present, charge even more. Here’s where merchant confusion comes in. How does a merchant know what is needed? How do they know if they qualified for the lowest rate or a higher rate? It is possible to train cashiers or order processors? Of course not!

Many merchants have been trained to make sure that level 2 data is supported, which is pretty universal today. Unfortunately, they’ve been lulled into believing this is the fix-all for getting better rates. How come so many transactions don’t qualify for commercial data rate 2?  Instead, merchants hit one of the others illustrated below, commercial standard or commercial data rate 1. interchange rate table commercial card

This is a single excerpt of many, many pages related to commercial credit card processing. Merchants need to know there are multiple rules for all types of credit and debit card transactions, not just commercial cards.

What is enhanced data required?  It depends on the card issuer and the card brand. For example, Visa commercial cards for travel & entertainment (T&E) have different requirements than other commercial cards. Do you understand why ” supporting level 2 data” is not enough? 

What terminal will give you the best rate? It’s virtually impossible for a merchant to qualify for the best interchange without a system- what individual has access to all the rules, could keep up with the changes, and could train all employees to do the right thing to qualify your transactions?

  1. Your payment solution must dynamically identify the card issuing bank, also known as bin management. Anything else is just not realistic because you can’t depend on employees to become payment processing experts.
  2. The solution then must intelligently require the data needed to qualify for the best rate AND pass that data through.  Incredibly, there are solutions that capture data, but do not pass it through. There are even some solutions that capture the data, but then submit their own fake data because they don’t trust your employees to not make mistakes. If you’re particularly adept at reading merchant statements, you can be lulled into believing you have great interchange qualification, however, your company is at great risk of getting caught for violating presentment rules.
  3. Your processor must support the receipt of the data. Not all processors can!

Rates and requirements are completely unknown to merchant employees who process transactions (cashiers) and the most educated financial staff. CenPOS proprietary technology is a private cloud, SaaS payment processing platform that AUTOMATICALLY optimizes transactions to QUALIFY for the BEST rates, saving you up to 1.05% per transaction by avoiding downgrades to non-qualified rates.

Click here to become a CenPOS referral partner.  Click here to become a customer through authorized reseller 3D Merchant services, or call the hotline at the top of this web page.

May bulletin on iPhone app for mobile payments, interchange updates

May brings the usual April interchange update. There are two noticeable bumps for MasterCard. An overall assessment increase to .012% for all transactions over $1000, and up to .04% more for WorldCard. Full article and link to 2011 Interchange Rates and Criteria.

BUSINESS CREDIT CARDS: The typical interchange rate to merchants for corporate cards is 2.2% or 2.4%.  The non-qualified rate is a whopping 3.17% on MasterCard, which can be avoided with proper interchange management. Depending on your business type, you may qualify for large ticket (minimum $1000) rates which can save you up to 1%. To manage these business card fees, check your merchant statement PENDING INTERCHANGE CHARGES to see what rates you’re hitting. If your eyes glaze over at the complexity of interchange fees, merchant discounts etc, read the 3D Merchant Services blogor email a request to be included in our next interchange insights webinar. TIP: With our payment platform you can automatically offer discounts to your customers if they use lower cost debit cards.

MOBILE PAYMENTS: We’ve officially launched our app for iphone, itouch and ipad. This enables you obtain swipe rates from the field, including signature capture or you can key enter. Receipts are emailed to customers. For service companies, you can swipe the card the first time, then re-bill via a secure token for subsequent charges. In both cases you qualify for the lowest rate, plus mitigate risk with the initial swipe. Droid is available for key entry only, with retail swipe coming by June 30.

Payment Card Industry (PCI) COMPLIANCE AND DATA SECURITY: The number of 2010 data breaches exploded in companies with 11 to 100 employees. A key commonality is simply the opportunity was there. Read the full 2011 Data Breach report which includes insider theft so you can identify your own weaknesses and take corrective action. Your company is not PCI Compliant and protected under Safe Harbor unless you can prove you’ve been compliant continually, not just when you completed an annual report. Trust me, all parties will look for ways for you to assume the full burden of costs associated with any data breach.  Every operation I visit or speak to has weaknesses so please put this on your priority list!. Need help? Call and lets discuss.

What’s in your merchant statements?  Multiple locations are now achieving over 90% pin debit penetration using our universal processing platform, CenPOS. Way to go!