If you process debit or credit card payments, you pay interchange fees. Have you ever wondered how this fee is determined and what exactly you are paying for? This week, we thought we would explain the breakdown of Beanstream’s interchange fees for card not present transactions in Canada.
The fees we are breaking down today is the 2.8% + $0.30 per-transaction.
Note: Card present (sproutPOS or Beanstream Mobile) have lower fees since the transaction is more secure when you have the physical card. US and UK merchants also have a different regional per transaction fees.
The 2.8% can be broken down into four parts:
- Card Scheme Fee: The interchange fees provided by the card schemes, Visa or MasterCard. These are posted publically and start anywhere between 1.64 and 2.25 for card not present transactions.
- Additional Card Scheme Fees: The ‘downgrades’ and ‘assessments’ published by the card schemes. For example, the additional charge imposed by Visa on a premium travel card that was used for the purchase, vs. a standard ‘basic’ visa credit card. All of those points have to be paid by someone! This also includes cross-border fees for any cards issued in a different country than the domicile of the merchant.
- Acquiring Fees: The acquiring fees imposed by the acquirer. This is the fee to essentially use the rails through their host and reach the issuing bank in the transaction request.
- Processor Fees: And finally, the fees charged by Beanstream. These are the fees to access our system and plug into the acquirers and issuers to process transactions.
The $0.30 is the gateway fee. This is to access our gateway and portal. This helps to pay for all the free reporting, account tools, and statements.
The 2.8%+$0.30 is a blended rate. This blends the multiple fees for each card association into one, which gives merchants peace of mind knowing that they have the same consistent rate month to month.
More sophisticated merchants might consider an Interchange Plus (IC+) fee structure where they pay the interchange rates off their exact payment mix. The blended rate combines card types into one easy rate. Interchange Plus will charge the merchant by card type and will fluctuate month to month based off usage. Merchants will be charged one fee for Visa, and another for MasterCard. IC+ can offer more competitive rates for those who know their monthly card type breakdown (eg. 55% Visa, 45% MasterCard), but most merchants like the comfort of one flat rate.
Do you need help deciding what fee structure is right for you? Let our team create the perfect blend for you.