Interchange pass through pricing is helping transform the credit card processing industry. But many business owners have a limited understanding on what this pricing component involves and how they can use interchange pass through pricing to benefit their business. In this latest post, our team looks at interchange pass through pricing in greater detail and presents a guide on how it can bring value to your business services.
In order to conduct business with credit card companies and process credit cards, most merchants pay a variety of fees to the various stakeholders involved in the process. Most merchant fees are paid in a bundled structure, whereby all fees are combined into a single rate that the merchant must pay for processing. However, there are a number of issues with bundled merchant fees. These issues include the following:
- It’s difficult to discern where the money is going. A merchant is unable to tell how their money is being allocated when they pay bundled fees. This may mean they’re overspending in providing high fees to a relatively insignificant stakeholder.
- It’s virtually impossible to know how much is being spent. Under a bundled fee program, merchants often find it difficult to track their credit card processing spending. They simply pay a percentage of their credit card transactions to the processor, without having access to precise figures. This could mean their costs rise incrementally as their business grows.
Benefits of interchange pass through pricing
To help avoid some of the uncertainty involved in bundled structures, credit card processing companies are now offering interchange pass through pricing, which allows merchants to see exactly how much they’re spending on each element of their credit card processing service. This level of transparency allows the merchant full access to their credit card processing financials, ensuring the following business benefits:
- All fees are available to analyze. With interchange pass through pricing, a merchant can analyze all fees to determine where they’re overspending on credit card processing.
- Reduced pricing. Most interchange pass through models offer reduced pricing to the merchant in the long-term, compared with a tiered fee structure.
- Hidden fees can be eliminated. A leading benefit to interchange pass through pricing is that all hidden processing fees can be completely eliminated, helping merchants get the best deal within the marketplace.
Our experts are now helping merchants reduce credit card processing fees and improve their visibility into business costs. To discover more on this topic, contact our experts today.