Monday, March 29, 2010

Credit Card Pricing: Do You Check Your Statements?

While I mostly deal with PCI and PCI-related issues, the topic of acquirer pricing does come up occasionally. Today I saw an article about payment card pricing that I think is worth your consideration.

The topic is whether you are better off with 'interchange plus' (quick answer: yes you are) pricing as opposed to 'tiered pricing.' Some acquirers are better than others at passing along to you the best pricing. Indeed, there is a mini-industry that has sprouted up to examine your monthly merchant statement(s) and see if you have had inappropriately downgraded (i.e., more expensive) transactions.

As you consider processors, make sure you tell them you want interchange plus pricing. Also work with them to make sure you don't have a lot of transaction downgrades. I have often started a PCI project by performing a payments analysis, that is, looking at transactions by brand and by interchange type. This helps me understand all the different payment channels in use as well as providing a good overview of the school's card business. I frequently see lots of MOTO and other card-not-present transactions at higher interchange rates than I would expect.

Take a look. Then look at your monthly merchant statement and make sure you are getting all that you are paying for...and not paying too high a price.

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