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1. What is Interchange? Interchange is the clearing and settlement system where data is exchanged between the credit card processor and the Issuing Bank. Interchange sends transactions that occur at the merchant level to the appropriate bank for posting to the cardholder account, sends funds to the appropriate card issuer for payment to the merchant, and assigns a qualification level for each transaction. The qualification level determines what rate the merchant will pay for the transaction.
2. What are interchange fees? Interchange fees are paid by the credit card processor/acquirer (Elavon) to the credit card issuer for transactions that are processed through interchange. The card associations (MasterCard and Visa) set the interchange fees. Interchange rates vary depending on the type of card presented, how it is processed and the type of merchant accepting the credit card. Credit card processors/acquirers also pay the card associations an assessment fee for each transaction.
3. How does my discount rate relate to interchange fees? You pay fees for processing your credit card transactions. Those fees are designed, in part, to cover your credit card processor’s expenses including the interchange fees paid to credit card issuers.
4. When do rate changes occur? Typically the card associations evaluate their interchange rate structures every spring and fall to determine if any changes are necessary. When the card associations provide processors with the results of their evaluation, Interchange rate increases or change qualification criteria, we pass this information on to our merchant customers. Typically Elavon notifies merchants of new fees or rate changes 30 days prior to the implementation date.