Interchange Plus Pricing

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Interchange is Confusing

A merchant said he had a sales rep approach him, show him the card not present rate on on interchange table and told him that’s what he would be charged for all internet transactions.  It looked like a pretty good deal to him. 

What the sales agent didn’t tell the merchant is that there are over 90 interchange rates.

And, the sales agent didn’t reveal to the merchant that interchange is based in large part on the type of card that is used to make a purchase.  That is, what card the buyer is using. 

There are endless types of cards that people use to make payments online.  Lots of people use rewards cards.  A rewards card is lined to accruing airline miles, cash back, or other types of rewards that the issuing bank offers in order to encourage buyers to use a particular card. 

Interchange rates for rewards cards are much higher than cards that are not linked to any reward.   In addition, corporate cards are also assessed higher interchange fees.

Merchants Have Little Control

One of the complaints merchants have been griping about for years is that the card brands and banks are essentially subsidizing card reward programs through the use of higher interchange rates.  And there is certainly validity to that argument.

The interchange system is so complex that it’s challenging even for experts to understand it. Don’t be taken in by promises of low rates.

Instead of looking at interchange rates, determine you effective rate of processing. A simple mathematical calculation yields a much more useful number in determining how much is really being charged for processing.


Interchange plus pricing models have become more common for both standard risk & high risk merchants.  Yet, it’s important for you to understand what your real costs of processing are. The best way to do this is to calculate what your effective rate of processing is.  

How are much are you really paying for payment processing?

Contact today

Gateway First Line of Defense in Processing Security

A secure payment processing gateway goes a long way in protecting both standard & high risk merchants.  

Many merchants do not realize that a gateway has many tools to protect against fraud. And also helps prevent internal security breaches in payment processing by allowing employees to access only those functions necessary to perform their jobs.   

Your first level of defense is to enable the fraud-fighting tools in your gateway.  

There is often a small transaction fee assessed for advanced fraud protection.  Still, it’s a small expense in exchange for a big return. Automated tools are highly effective in preventing and managing fraudulent transactions.

In addition, add chargeback prevention and mitigation services.  These help reduce risk from “friendly fraud”. 

Yet, merchants must also take great care in protecting security from the inside of the the business operations as well.

Tighten Internal Security of Vendors

Most businesses simply do not have the expertise or budget to adequately protect themselves from the ever increasing risks of security breaches.  Therefore, companies are outsourcing security protection to outside vendors.

It’s vital to remember that ultimately security protection responsibility lies with the company, not the outsourced vendor.  If and when security breaches occur it, the company bears the consequences.

Consider the following when moving to security outsourcing.

  • Consistently monitor the vendor.  Executives should appoint knowledgeable staff that has a thorough understanding of the correct procedures and technologies.
  • Have multiple departments overseeing the outside vendor.  This helps prevent an insider colluding with an outside vendor.  Naturally, be sure the departments communicate with each other and with top company executives.
  • Read the contracts.  Check limitations and exclusions. Know exactly what is covered.
  • Have a clear and immediate response plan in place in case there is a breach.
  • Verify that the vendor is compliant with all relevant legislation and follows best practices procedures.
  • Retain the ability to monitor and independently audit the vendor to verify performance.
  • Track contractor performance through statistics such as number of incidents, time taken to respond to incidents, etc.


In today’s world, fighting fraud is more important than ever. Use your payment gateway as your first line of defense against fraudulent transactions. And tighten internal security to further protect your business.

How are you protecting your business against fraud?

Contact today

Recurring Billing Models

Recurring billing is a great way to stabilize cash flow while making it easy and affordable for customers to buy from you. 

Recurring payments are an effective way to sell products or services and are particularly valuable for SaaS service providers, subscription billing, or membership sites.

Yet, recurring billing can also lead to revenue leakage which can cause erosion of profits if not properly controlled. 

What Causes Revenue Leakage?

The most common reason of revenue leakage from recurring payments comes from card declines. 

Card declines are caused by a lot of reasons. Common reasons include reissuing of cards due to loss or theft, card upgrades, card expiration dates, or security breaches that require new cards to be issued. 

Regardless of cause, card declines are expensive to merchants.

Account Updater Services for Recurring Billing

Using specialized payment processing technology, you can automatically transform declined cards into authorized transactions. 

When a card is declined, the processor gets the updated card information from the issuing bank.  The file is updated and the card can be resubmitted for approval. 

As a result up to 80% of declined cards turn into authorized transactions.  All without manual intervention of any kind from the merchant or the consumer.


Account updater services decrease revenue leakage by automatically updating card data for recurring payments. Only a few processors offer this innovative service. Those who do, require at least $500K per month in recurring billing to qualify for an account.

How are you handling your recurring billing card declines?

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Reduce Shopping Cart Abandonment with Alternative Payments

Consumers abandon shopping carts for many reasons. Regardless or the reason, an abandoned shopping cart means no sales to you.

According to a recent study 22% of buyers said the absence of the payment method they wanted to use was the reason for abandoning the transaction and leaving the site.  

This is a powerful reason to accept alternative payment methods such as electronic checks.

Only 70% of Americans have cards.  Yet, more than 95% of US households have bank accounts and can pay you with an echeck. 

And of those shoppers with cards, 25% are close to their limits. If a card is declined, offering an echeck payment option lets you rescue a sale that otherwise would have been lost.

Other Reasons for Abandonment

Cost of shipping is a big issue.  43% of shoppers left the cart due to cost of shipping. Consumers are surprised when shipping is higher than expected.

Other reasons included: total cost of purchase ending up more than expected (36%).

A desire to visit other sites before buying (26%) was another reason shoppers leave sites.. Since 30% of internet sites accept checks online, you risk losing the sale if the shopper goes to a site that offers echecks and you do not.  

Others reasons for shopping cart abandonment is that wallets or purses weren’t readily at hand at the time or fears that the site could not keep their card data safe. 

With about two-thirds of consumers walking away from sites before completing transactions, checkout abandonment is a sizable problem for online merchants. A recent survey reveals that the average purchase amount lost each time is $161 (on an average of 2.4 items) for large merchants and $118 (2.2 items) for small ones.


While you can’t control all the reasons shoppers abandon carts, you can control the payment options you offer at checkout.  

Electronic checks are the most popular alternative payment option for US shoppers. Millions of Americans use echecks on a regular basis to pay for goods & services online.  

The more ways shoppers can pay you, the more sales you make.

How many payment options do you have on your checkout page?