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(USA Today)   Now that interchange fees have been regulated to more reasonable levels, retailers have won the right to charge more if you pay with a credit card   ( divider line
    More: Asinine, interchange fees, MasterCard, visas, credit cards, supermarket chains, u.s. banks, Rite Aid  
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7606 clicks; posted to Main » on 13 Jul 2012 at 9:15 PM (5 years ago)   |   Favorite    |   share:  Share on Twitter share via Email Share on Facebook   more»

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2012-07-13 07:31:34 PM  
3 votes:
Why the hell shouldn't I be able to give a discount to a customer who pays with cash, instead of with, say, a certain piece of green plastic that only pays me 96 cents out of every dollar?
2012-07-13 08:55:25 PM  
2 votes:
The only interchange fees that were regulated were debit. It was broken into 2 categories: regulated & unregulated. Regulated banks have assets > $10Bil. Unregulated is obviously
The interchange fee is broken in to both a percentage & transaction fee. Regulated debit cards have an interchange cost of 0.05% & $0.22. Unregulated was the old rate of 0.95% & $0.20. That was recently lowered. I believe it is now 0.80% & $0.15. These fees are paid to the card issuing bank. So, if you carry a Chase debit card .05% & $0.22 per trxn of everything you buy goes to them. Your credit union card is likely the higher, unregulated rate.

On top of interchange you have you have what is called the assessment. Visa is 0.11%, Mastercard is 0.11-0.13% depending on the card type. This is paid directly to the respective card brand: Visa, Mastercard, Discover.

On top of that you have the processor mark up. This is unregulated & probably the most confusing part of pricing for any business owner as there are numerous billing schemes available. Knowing which one is best requires math. As we know, most people do not like math.

Large volume retailers often receive what is known as Pass Thru pricing. This is where the processor adds a flat markup on top of the Interchange & Assessments. If you negotiate a rate of Interchange & Assessment + 0.30% & $0.10 it works like this;

Swiped debit interchange: 0.05% & $0.22 + Assessment 0.11% + Mark up 0.30% & 0.10 = Total rate of 0.46% & 0.32.

That Delta miles reward card has a higher interchange. I believe it is 1.65% & 0.10 for a swiped transaction. That card would have a rate of 2.06% & $0.20.

Easy math: $100 trxn on debit costs the store $0.78. The card with the free airline tickets: $2.26.

They get f*cked on small ticket items. That has a completely different interchange cost. I believe it's around 1.06% & $0.05.
2012-07-13 09:20:58 PM  
1 vote:
BSABSVR: Has the tl;dr version right.

BobtheFascist: With the Tolstoy version.

I run approx. 700K through annually. When all is said and done my CC effective rate is about 2.75%. That includes all the fees(statements, batchouts, higher rated corporate cards, blah blah shiat they throw in when they've worn you down). Debits come in under at 1%. I wouldn't charge more for someone running a cc because I'd look like an asshole. I'll certainly cut someone a break for cash on a big purchase and see that as part of the price negotiation. Also, I've told more than a few younger punks that I won't sell them a $1.49 soda on a credit card. They look incredulous, but I explain it to them and they usually understand.
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