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Interchange fees are fee items used in interchange processing and defined by the major card brands: Visa, MasterCard, Discover and American Express. The Interchange category has a Category Type of 10.
Because of the nature of these fee items, a few additional rate methods are available that pertain specifically to interchange processing, including pass-through interchange, as well as qualification rate and qualification percent pricing. The qualification rate process will compare the actual interchange rate for a transaction to the qualified rates, and charge the difference.
Using shortcut methods within the Interchange category, fee items can help the client minimize the costs of maintaining merchant profiles. PPM will use the latest interchange rates published by the card brands in its calculations while processing fee items. In addition, using the qualification rate fields available in this category allows PPM to calculate the differential pricing without intervention or upkeep on the part of the client.
Pass Through Plus pricing may also be accomplished by setting the rate on a fee item as pass through interchange, and entering a value in the Percent and/or Per Item ($) over and above the pass through rate. In this case, each transaction will be calculated based on the interchange rate from the card brand, and the Percent or Per Item amount will be added to it afterward.
Example: A MasterCard Corporate Data Rate fee may be set up on a merchant profile as an Interchange fee with a pass through interchange rate (meaning the most up-to-date interchange rate is passed from the card brand). The merchant will be charged according to the latest published rates; for example he may be charged 2.54% and $0.10 per MasterCard transaction. If MasterCard updates these interchange rates in the future, the new rates will automatically be applied to the merchant from that point forward. TSYS notifies clients when any new or updated interchange rates are introduced in the system.