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How do I predict what interchange fees will be?

You can't predict interchange with 100% accuracy. But, knowing your customer base and analyzing your historical acceptance trends can provide valuable insight into future rates.

Unfortunately, it's rarely possible to "know" what the rate of any given card will be. Since there are just so many card types, it's hard to even know what all the rates are. But to add onto that - many issuing banks don't "display" the card type. You don't know if it's a World Elite card, or a Signature Preferred card, because they're not advertising it to you. So, you can't predict interchange on your overall acceptance with 100% accuracy. That being said, there are several methods to estimate, and get close.

It starts with historical trends. Every business is different, and as such, they'll have a different customer base who pays with a different "mix" of cards. Since you'll have your own unique price points and average ticket, your customers will invariably create interchange rates that are unique to your location. With that in mind - your past processing history is your best gauge of future costs! Most businesses who have consistent customer flow have a very consistent interchange fee structure, month over month. Usually, deviations in total rates will only be about 0.10% - 0.20% overall. That means that you can quickly spot "outlier" months, to see if there are erroneous fees from your provider, or some sort of issue that caused higher rates for the given month.

On a per-transaction basis, there are a few things that you can see on a customer's card that will alert you to some interchange specifics:

  • Debit cards from big banks: Usually, debit cards will say "debit" on them. Typically, the big banks will advertise on their cards, too. If you see a "big bank" debit card, you know the interchange rate will be 0.05% + 22¢ per transaction. Big banks are defined as a bank with 10 billion dollars in assets! So think: Bank of America, Wells Fargo, CitiBank, US Bank, etc. Any of these bank's debit cards will always have that low interchange rate, no matter how they're processed (swipe/dip/tap/keyed/online).
     

  • Business/Corporate cards are expensive. You can't specifically know the rate at a glance, but typically if you see a large company's logo on the card, it's going to cost you about 0.50% - 1.00% more than a typical consumer card.
     

  • Signature Preferred / World Elite cards are expensive. Visa offers the Signature Preferred card, and MasterCard offers the World Elite card. Both of them carry high underlying interchange rates (2.40% and 2.50%, respectively) so you know you'll pay more. These cards sometimes advertise their brand, so you may see these terms.
     

  • American Express tends to be slightly more expensive. The cost gap has narrowed recently - American Express is no longer "way more expensive". In fact, in many scenarios, the costs are equivalent to Visa/MasterCard. But, American Express doesn't issue debit cards, so they don't have a "low cost" card to balance out their more expensive ones. And particularly on large-ticket transactions, American Express rates can get steeper.

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