Interchange-Plus Model Basics

There are several different pricing models, used by credit card processing companies today, and interchange plus is one of the most popular among them. The way it works is very simple. A credit card merchant processor simply adds its mark-up to the interchange rates that are published regularly by Visa and MasterCard and the result is what the merchant pays as a card processing cost. So if the interchange rate for a Visa CPS/Retail Credit card is 1.54% + $0.10 per transaction and the credit card transaction processing provider has a mark-up of 0.30% + $0.15 per transaction, the resulting rate will be 1.74% + $0.25 per transaction and that is what the merchant will be charged.

Merchant services providers can use one mark-up for all interchange rates or, which is more often the case, different mark-ups for different types of cards. For example, if a payment processing services provider wants to offer the same discount rate for both Visa and MasterCard credit cards, it will have to use different mark-ups, as the interchange rates, used by each Credit Card Association, are different.

The interchange plus pricing does not apply to Discover and American Express rates. In fact, none of the pricing models, used by the payment processing companies, applies to them. Both Discover and American Express set their own pricing and mark-ups are not allowed.