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Frequently Asked Questions
An Interchange Rate, also known as an Interchange Fee, is a term used in the payment card industry to describe a fee that bank card networks such as Visa and MasterCard require merchants to pay card-issuing banks when merchants accept their credit and debit cards for purchases.
This rate compensates card-issuing banks for the risk and expenses they incur to process credit and debit card transactions. The fee amount is based on the level of risk associated with funding a transaction to encourage businesses to follow procedures that reduce fraud.
Interchange Rates 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, for example, the fee averages approximately 2% of transaction value but can vary from much less to much more. Merchants should understand the specific qualification criteria of the Interchange Rates that affect them.
Interchange fees paid by merchant-acquiring banks to cardholder-issuing banks are in place to cover the cost to convert a charge on a cardholder's card to a cash deposit at the merchant business checking account, including cost factors such as billing services, credit and fraud risk, profit, etc.
Visa and MasterCard business, commercial and purchasing cards are used just like personal credit and debit cards. However, Level-3 transactions carry lower interchange rates because these cards are used in a B2B or B2G situations and fraud, chargebacks, etc are less and the costs are lower. In addition, the merchant is incented to provide the increased data to support the industrial buyer and improve their card accounting.
Many merchants can qualify for a lower Interchange Rate by processing more in-depth Level-3 data (or line item detail) with each transaction.
Level-3 line item detail is provided electronically by the merchant and contains the same type of information found on an itemized invoice and would typically contain specific purchase information such as:
- Item description
- Item ID
- Unit of measure
- Commodity code
- Price Invoice number
- Order number
- Purchase card customer code
- And more...
The rules for interchange qualification can be quite specific and given the wide variety of card brands and catagories, too numerous to define here. However, the top reasons merchants often fail to achieve correct interchange qualification include:
- Not providing the level-3 information (for purchase card transactions)
- Incorrect setup / profile information such as having an incorrect merchant category code assigned
- Not using the AVS (Address Verification System) for card-not-present transactions
- Having the authorization and settlement amounts differ
- Settling a transaction too long after an authorization was received
All card products carry some form of merchant fee. The term "Interchange" describes the interbank transactions related to the member banks of Visa and Mastercard.
It could be a great deal. Consider, for example, a merchant who processes more than $1 million per month in purchase transactions and receives a statement reflecting low "Data Rate 1" rates. For the merchant, this low level of data qualification could equate to nearly 3.5% in processing costs on every commercial card transaction (interchange + downgrade charges + surcharges). By having the merchant capture Level-3 data on every purchase card transsaction, however, the provider could reduce the merchant's rate to 2.20% while reducing the merchant cost by 130 basis points.As of October, 2007:
Purchase Card, Standard: 2.70% + $0.10
Purchase Card, Electronic: 2.45% + $0.10
Purchase Card, Level-2*: 2.00% + $0.10
Purchase Card, Level-3: 1.80% + $0.10
B2B – Corporate Cards Interchange Category
Corp Standard: 2.95% + $0.10
Data Rate I: 2.65% + $0.10
Data Rate II: 2.33% + $0.10
Data Rate III (P-Card Level-3): 1.75%
Because the rates do change, a merchant should discuss their specific situation with an acquirer who is knowledgeable about the processing of commercial / purchase card transactions and the requirements to qualify for Level-3 interchange rates.
3DSI Product Questions
EC-Zone can process MasterCard, Visa, American Express, Diners Club and Discover. Most merchant accounts are set up to accept MasterCard and Visa automatically, but require additional set up to accept all other card types.
Yes, multiple users can log on to EC-Zone at the same time, as long as they are using different User IDs. The basic subscription includes 5 User IDs. Additional User ID's are available for an extra charge.
No, the EC-Zone is a fully-hosted application. All system upgrades are immediately available to the user, and do not require the download of software.
Yes, there is telephone and e-mail support provided by 3Delta Systems, Inc.
Yes, EC-Zone supports the following card association methods of fraud protection:
• Real-time Authorizations
• Address Verification Service (AVS)
• Imprinted Verification Code (IVC)
Yes, users maintain passwords through Account Setup.
Yes, EC-Zone is capable of providing access control for each individual and provides the ability to limit access to transaction information and action types.
You may submit a transaction without any prior set up. Go directly to the Create Transaction screen and manually key in the necessary fields. You must enter at least one line item on the Add - Item Detail screen to submit a transaction.
Yes. However, for commercial purchase cards to qualify for the best interchange rates, at least one line item of information must be provided. The EC-Zone can be configured to not require line item detail and EC-Linx and EC-Batch allow transaction processing without the line item detail.
Yes, transactions can be reviewed after they are submitted. Transactions are available for online view for at least one year, at which point they may be electronically archived for an additional two years.
The confirmation e-mail provides the customer with the Order Date, Cardholder and Company Names, Order Details, Shipping Information and Transaction Notes.
EC-Zone allows you to process a transaction within 15-45 seconds.
Typically, it takes 2-4 days to get paid for a transaction, however turnaround depends upon your contractual agreeement with your acquirer.
A transaction confirmation and receipt will appear on the EC-Zone screen when your transaction has been approved. In the case of a declined transaction, you will receive an immediate message notifying you that the transaction has been declined. EC-Linx returns an authorization result in real time, while EC-Batch returns the authorization results in the return file.
You must contact the cardholder, who must then contact his or her card issuing bank.