PRICING FAQS
What’s the deal with “Pass-Thru” pricing?
We price all of our merchants with “Interchange Plus” pricing…aka “Pass-Thru Plus” pricing.
Why do we do it? The reason is simple.
It’s more transparent and saves our merchants thousands.
COMMON QUESTIONS ABOUT INTERCHANGE
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✔ Each time a business processes a credit card, it pays a fee to the bank that issued the customer's card. This is called an interchange fee, and it is calculated by adding a percentage of the transaction volume to a flat transaction fee.
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✔ Issuing banks don't set interchange rates independently. Instead, issuing banks collectively agree upon rates through Visa and MasterCard. This is why all issuing banks charge the same interchange rates, and processors have no influence on them. Interchange rates are exactly the same for every processor a business may use.
Fore more about specific fees visit:
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✔ It’s hard to predict which route the card issuer will process any given transaction. The table below shows common Interchange fees that a convenience store might be charged on Visa or MasterCard transactions.
✔ One thing is certain, the structure of the Interchange fees favors higher dollar transactions than lower dollar transactions! (See the highlighted yellow effective rates on the 5 different sale amounts.)
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✔ We pass through all interchange fees (called “pass-thru”) as well as our per-transaction charge on a daily basis as we process your transactions.
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✔ Some merchants choose to charge a flat rate on a transaction for the convenience of a retailer and for the purpose of making healthy margins on credit card mark-ups.
✔ We choose to use an Interchange Pass-Thru model to maximize your savings on every transaction. The benefits of Interchange are lower ‘effective rates’ as your per transaction sale increases. (This is shown in the table below).
✔ For Example, if we charged you a flat 3% rate you might benefit from a Flat-Rate Structure on a $1.00 credit card transaction. However, if that same 3% were applied on a $50 transaction (A gas fill-up!) you could be paying 1.5% more than you should!
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✔ The Effective Rate is the percentage of your gross sale you are paying towards card fees. To calculate, divide your fee by your gross sale.
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The average ticket is the average sale amount over a period of time.
To calculate your monthly average ticket:
Divide gross sales by the number of transactions.
(Ex: $100,000 / 5,000 = $20 average ticket)
Want to supercharge your knowledge of how cards fees impact your store?
Here are 3 simple steps:
STEP 1: LEARN ABOUT INTERCHANGE FEES
The journey of a transaction has many stops.
From your point of sale, to the processor, to the card networks and banks, each hand has a role to play.
The card networks (i.e. Visa) work with the banks to charge a fee for this verification and approval process.
Collectively they call these fees “Interchange Fees.”
These fees are made up of a percentage of the sale and a fixed per transaction fee.
Several factors determine what fee is applied.
STEP 2: UNDERSTAND HOW A PROCESSOR CHARGES FEES
The card network and the banks charge Interchange fees to the processor. The processor then decides how to charge the merchant (you) for these fees.
There are two common fee structures in convenience retail:
Pass-Thru is the most common method. It “passes on” the fee charged by the card network and adds a processor fee. In our example the added fee is “$0.06 per transaction”
This method is more complex, but ultimately allows the retailer pay lower fees on card types with lower Interchange fees.
Blended Pricing or Flat Rate pricing is commonly used by the Major Fuel Brands and for e-commerce. This method simplifies all the Interchange fees by creating one (or a few) categories of fees (i.e. 2.90% + $0.30) for all transactions.
While this method makes understanding the fees much simpler, the merchant doesn’t benefit from lower Interchange card types.
STEP 3: UNDERSTAND THE IMPACT OF AVERAGE TICKET TO YOUR EFFECTIVE RATE.
The least best kept secret to a low effective rate: a high average ticket!
The total sale of a card transaction will impact your fees more than anything else. Because Interchange fees are made up of a percentage of the sale and a per transaction fee, the higher a sale the less impact a per transaction fee will have on your overall sale.
Simply put, the higher your average ticket the lower your effective rate.
We think the table below details this better than anything else.
