What is Interchange++ pricing?

Oct 16, 2023

Many payment providers use “Blend pricing” for credit card processing. It's a “simplified” approach, merging all transaction fee elements into a single figure, often something like "1.9% of the transaction value". At Fung Payments, we've opted for a more transparent pricing strategy detailing the various components that make up the fee. This is termed "Interchange++ pricing,” while it might seem complex, it's more transparent and makes you pay less overall.

Understanding Interchange++

Now that we know the difference between the pricing models let's explore the Interchange++ formula:

Interchange++ = Interchange fees + Scheme fees + Acquirer markup

Next, let’s have a look at the entities involved in a credit card payment transaction:

  • You, the merchant (or vendor), who eventually covers all costs.

  • The acquirer (i.e., Fung Payments) responsible for the Acquirer Markup.

  • The card scheme (like Visa or Mastercard) that levies the Scheme fees.

  • The issuer (or the bank of your customer) that imposes the Interchange fee.

  • Your customer, using a credit card to purchase.

Imagine you run an online store in the Netherlands named Great Bikes, with three customers named Jan, Alexa, and Giorgio. They all pay with Visa credit cards, but the card type and origin vary. After processing their payments, you'll notice the transaction costs differ based on their card types and origins.

Visa and other card companies set Interchange and Scheme fees that result in varying transaction costs. These fees can be found on the companies' official websites, but they differ for each region, making matters more complex. The transaction costs depend on:

  • The cardholder's region

  • The merchant's location

  • The merchant's business type

  • Card type: consumer vs. commercial

  • Transaction type: In-person or online

  • Transaction security methods

The European Union has limited interchange rates for consumer credit cards to 0.3%, resulting in lower transaction costs for vendors. In contrast, the US has not implemented such a cap.

The Fung Payments Approach

Fung Payments offers Interchange++ pricing for credit card transactions, with a focus on intra-regional 'card not present' consumer transactions. This typically results in a transaction fee of 0.59%.

For every transaction, Fung Payments charges a €0.10 fee and an acquirer markup of 0.3%. (Please check our website for the most updated pricing).

Fung Payments is committed to delivering competitive enterprise rates, especially for independent business owners. Our Interchange++ pricing structure allows us to maintain a minimal margin on each transaction, meaning we don't need to account for an 'insurance premium' for potentially costly card types. Despite the complexity of credit card fees, we prioritize cost-effectiveness over simplicity. That's why Fung Payments chose Interchange++ pricing.