| Q. |
What is Interchange? |
| A. |
Interchange fee is a term used in the payment card industry to describe a fee that a merchant’s bank (the “acquiring bank”) pays a customer’s bank (the “issuing bank”) when merchants accept cards using card networks such as Visa and MasterCard for purchases. In a credit card transaction, the card-issuing bank in a payment transaction deducts the interchange fee from the amount it pays the
acquiring bank that handles a credit or debit card transaction for a merchant. The acquiring bank then pays the merchant the amount of the transaction minus both the interchange fee and an additional, smaller fee for the acquiring bank.
These fees are set by the credit card associations,[1] and are by far the largest component of the various fees that banks deduct from merchants' credit card sales, representing 70% to 90% of these fees. Interchange fees have a complex pricing structure, which is based on the card brand, the type of credit or debit card, the type and size of the accepting merchant, and the type of transaction (e.g. online, in-store, phone order). Further
complicating the rates schedules, interchange fees are typically a flat fee plus a percentage of the total purchase price (including taxes). In the United States, the fee averages approximately 2% of transaction value. |
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| Q. |
What is Interchange pass-through? |
| A. |
Interchange pass-through is the actual charge that the acquiring bank pays the issuing bank, passed through to the customer without additional basis points. Typically a small transaction fee is added to each transaction. |
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| Long term contracts |
| Q. |
What are the benefits of signing a long term credit card processing contract? |
| A. |
None, signing a contract doesn’t necessarily lock in your quoted rate, if the card associations increase Interchange it will be passed on to you! |
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| Q. |
My sales rep told me that I have to sign a long term contract that all banks require it. |
| A. |
Not true! Keep shopping! |
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| Q. |
What if I sign a long term contract and my rates increase? |
| A. |
You pay the increase, if you break the contract, you will be subject to early cancellation fees. Early cancellation fees run f$300.00 – $900.00! |
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| Q. |
How do I know if I’m signing a long term contract? |
| A. |
If your sales rep is promising anything free i.e. equipment, or an unbelievably low rate, the odds are you are signing a long term contract. If your application is more than a couple of pages you should be suspect and finally, always read the fine print! |
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| Equipment Leasing |
| Q. |
When does it make sense to lease equipment? |
| A. |
Leasing equipment never really makes sense! POS (point of sale) equipment is fairly inexpensive! New equipment is as low as $250.00 and typically you can find used or refurbished equipment for less on e-bay! Leasing equipment can cost thousands of dollars! |
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| Q. |
I’ve signed a long term equipment lease, is there anything I can do to get out of it? |
| A. |
Nope! You’ll have to bite the bullet and make the monthly lease payments until the term of the lease runs out. Make sure that you return the equipment at the end of the lease otherwise your leasing company will continue to charge you or roll you into another year depending on the terms of your leasing contract. |
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| Q. |
Should I pay the buyout at the end of the lease? |
| A. |
If the buyout is a dollar, then yes. If the buyout is 10% of the lease, no! Typically you can purchase new equipment for the cost of the buyout! |
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| Programming/Download Fees |
| Q. |
Should I pay programming fees? |
| A. |
Downloads and trouble-shooting fees should be included in your monthly service/statement fees. |
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| Q. |
I own carwashes with in bay automatic equipment. The manufacturer charges me 100.00 to download my equipment every time I change processors or add a service. The manufacturer is my only download option, what can I do? |
| A. |
At this point you are at the mercy of the manufacturer. Always negotiate future down-load fees with manufacturers before the sell. More manufacturers of In-bay automatic equipment are -charging down-load fees. Fortunately there are still several that don’t. Contact us for a list. |
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| Batch Header Fees |
| Q. |
What is a Batch Header Fee? |
| A. |
A Batch Header Fee is a fee that is charged by some processing banks when a batch of daily transactions is sent to the bank at the end of the business day for settlement. |
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| Statement Fees |
| Q. |
Why am I charged a statement fee? |
| A. |
A monthly statement or service fee, typically 10.00 is charged by most processing banks to cover the cost of mailing a monthly statement or providing an internet reporting tool and 24 hour help desk account trouble–shooting and downloads. |
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| Annual Fees |
| Q. |
What is an annual fee? |
| A. |
Typically shows up on your January statement and runs 50.00 to 75.00. If your processor charges one, shop for a new one! |
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| Minimums |
| Q. |
What is a minimum? |
| A. |
Minimums vary from processor to processor, but typically are $15.00 to $25.00. A minimum is charged when a merchant doesn’t meet minimum account charges to hold the account open. Any processing activity is charged against the minimum charge. Typically minimums don’t come into play. |
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| Fleet Cards |
| Q. |
What is a fleet card? |
| A. |
Fleet Cards are used by State, Federal and Commercial fleets to control drivers spending and track maintenance, repair and the fuel cost of each vehicle. |
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| Q. |
Why should I accept fleet cards? |
| A. |
Accepting fleet cards is a great way to attract large and small fleets to your place of business. Fleets look for accepting vendors on fleet card websites, such as; www.wrightexpress.com. |
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| Q. |
Do all processing banks support fleet cards? |
| A. |
No, if you’re interested accepting fleet cards check with your current credit card service provider. |
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| Q. |
What types of POS equipment are fleet card compliant? |
| A. |
Fleet card compliant equipment types vary from processor to processor. Some processors have certified Hypercom equipment while others have certified Verifone. Both types are certified for all fleet cards types such as: Wright Express, Voyager, MasterCard Fleet, Fuel Man, PHH (co-branded with Wright Express) Fleet One, Comdata through different processing banks. Verifone hardware is also capable of supporting food stamps and gift
cards. |
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| Q. |
How do I process a fleet card? |
| A. |
Swipe the card as you would a VISA or MasterCard, your POS terminal will prompt you for additional information such as: odometer reading, product code and the drivers I.D. number. |
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| Q. |
Do I need a pin pad to enter vehicle information? |
| A. |
Hypercom equipment requires an additional hand held pin pad.
The drivers ID, odometer reading and product code can be entered directly on most Verifone models and an additional pin pad isn’t required. |