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What is interchange and how does it work? |
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Understand how to make the most of your funds and the least of your losses! |
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Interchange is the banking transaction that takes place when a customer uses a credit card to make a purchase
at your business. Chase Paymentech and your customer's credit card-issuing bank exchange information so the transfer of funds from
your customer's bank to your bank can be completed. This exchange of information is managed and maintained by the Visa® and
MasterCard® associations.
Interchange can be a complex topic and it has a direct effect on your bottom line, so it's important that you understand what's
happening with the latest Visa and MasterCard interchange rate changes and how they impact your business.
An interchange fee represents a portion of the overall expense Chase Paymentech pays for processing your Visa and MasterCard sales.
This fee is in turn passed on to you as part of your discount rate. So when you make a Visa or MasterCard sale, we pay an
interchange fee on your behalf to the customer's bank to compensate them for the underwriting, funding and billing of your
customer. Keep in mind, Visa and MasterCard establish the rates and standards for interchange.
Interchange categories and their related fees are determined by the nature of your business and the processing procedures you
follow. Visa and MasterCard determine these rates by assessing the level of risk and expenses associated with funding and
processing a transaction. For instance, the interchange fee for a face-to-face transaction is generally less than mail-order
transactions because the risk of fraud is lower. The risk is lower with face-to-face transactions because you are present and
can compare signatures and swipe the card. Processing procedures with a higher risk of fraud require higher interchange fees.
Twice a year, Visa and MasterCard examine changes in the card payment industry and implement whatever changes they feel are
necessary. It's our responsibility to communicate those changes to you before they are effective, so that you
are aware of them and can make any changes that you feel are necessary for your business. |
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