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An INSIDE Analysis of Credit Card Processing and the Payment Industry
Understanding the Payment Industry is a tough task. Merchants are faced with confusing statements, hundreds of various payment processing fees, and numerous processing options offered by Merchant Service Providers, Payment Gateways, and other payment processing entities. The PAYMENTINSIDER provides articles, posts, and whitepapers on the Payment Industry, including this article, Visa and MasterCard Interchange Downgrade Fees, with the goal of creating transparency in this marketplace.

Visa and MasterCard Interchange Downgrade Fees

What are the penalties or fees associated with downgraded Visa and MasterCard transactions? Downgrade fees, or surcharges, for credit card transactions are relative to your type of merchant account plan. Merchants may process under various plan types – Tiered / Bucketed or Interchange Plus / Passthrough – depending on how the provider sold the merchant on the account. For this article, we’ll assume an Interchange Plus or Passthrough type of account, as that is the … Read More »

Who is the Best Merchant Services Provider?

There is no single merchant service provider that can be considered the best. A merchant needs to evaluate several options, but before even researching merchant service providers, they should have a grasp on their specific needs and limitations, and understand the basics of merchant services. A merchant who only needs to run a limited number of transactions through a virtual terminal or payment gateway may find a better fit with one merchant service provider versus … Read More »

Merchant Service Provider – Underwriting and Risk

A merchant service provider offers many products and programs to help businesses process payments and may also act as the underwriter on your merchant account; meaning they assume the risk should your business not deliver on its promise. The Risk The risk associated with credit card processing is complex. There are a number of variables that are considered when determining a merchant’s payment processing application: Merchant’s longevity and financial stability Type of industry and business model … Read More »

Payment Processing Downgrades

The Visa, MasterCard, and Discover Card Associations all maintain Interchange Downgrade rates for credit and debit card transactions that do not meet the requirments for the transaction to clear at the card type’s correct Interchange Rate. Downgraded Interchange Rates are higher than the card’s normal Interchange Fee, so it’s always in a merchant’s best interest to avoid downgrades whenever possible. Always clearing transactions at the correct Interchange, and avoiding downgrades allows merchants to obtain the … Read More »

Merchant Service Account Types

There are two main merchant account pricing plans, Tiered/Bucketed pricing and Interchange Plus pricing. However, from a cost savings perspective, there’s only one plan you should consider – Interchange Plus pricing. Interchange Plus pricing is the most transparent pricing plan for credit card processing and is the payment processing plan type VeriProcess recommends for all merchants. The merchant pays the interchange rate set by the card association – without any intermediary markup. The ‘Plus’ portion of the pricing plan, the … Read More »