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Interchange Changes Effective April 2010

21-Mar-2010

 

The two primary components of merchant processing fees are Interchange and Association Assessments.  Interchange is the amount that must be collected and paid to the card issuing bank.  The Association Assessments are the fees that are collected and paid directly to the national card brands; Visa®, MasterCard®, and Discover®.  The Interchange and Assessments fees are set by their respective companies.  Interchange and Assessment costs are the same for every processor in the United States.

Visa is lowering their Signature Debit rate from 1.03% to 0.95% and increasing the transaction fee from $0.15 to $0.20.  They are also adding Cigar stores as eligible for the No Signature Required Program..

The most notable changes are from MasterCard.  They are raising their Assessment fee from 0.095% on gross volume to 0.11%.  This affects every MasterCard transaction.  They raised their World Business cards by 0.12% for each category and introduced a slew of new Rewards Business card categories.

Merchants who see a lot of MasterCard business cards especially need to know MasterCard’s rule change on sales tax.   MasterCard is adjusting sales tax requirements for Level II interchange programs.  Zero tax amount transactions will no longer be eligible for Level II interchange.   The sales tax amount must be reported within 0.1% and 30% to be eligible for Level II interchange programs.  This change does not affect existing qualification requirements for Level 3 interchange categories.

 

Even if a transaction is Tax Exempt it will qualify at Level 1.  Here are the differences when Sales Tax does not fall between 0.1% and 30%:

MasterCard Business Card Rates

Level 2

Level 1

Difference

M- Corp Data Rate - Business

2.20%

2.65%

0.45%

M- Corporate Data Rate - Corporate

2.15%

2.65%

0.50%

M- Corp Data Rate - Fleet

2.50%

2.65%

0.15%

M- Corp Data Rate - Purchasing

2.40%

2.65%

0.25%

M- Enhanced Data Rate

2.32%

2.77%

0.45%

M- World Business Data Rate

2.37%

2.82%

0.45%

M- World Elite Business Data Rate

2.42%

2.87%

0.45%

M- SmlBus Enhanced Data Rate

2.32%

2.77%

0.45%

Visit our merchant library for more details on Interchange.
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