Recurring Payments: Low Interchange Rates for Recurring Transactions

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By David Goodale of

As we continue our exploration of how membership organizations deal with recurring payments, we look at how merchants can take advantage of lower Interchange Rates for Recurring Transactions.

This is part two of a 3 part series. Part one of the series can be read here.

Few Merchants Take Advantage of Lower Interchange Rates for Recurring Transactions!

It is surprising how many merchants, and in some cases even recurring billing platforms do not properly flag transactions to take advantage of the lower interchange rates that are associated with recurring billing transactions.

If the phrase interchange has you confused, it simply means the cost that Visa and Mastercard charge to a payment processor each time a transaction is processed.  You might get frustrated when you think of all the fees that you pay to your credit card processor.  What you may not know is they don't get to keep most of those fees.  They go back to Visa/MasterCard and onto the card-issuing bank.  So "interchange" means the fees that payment processors must pay each time a credit card transaction is processed.

Very few businesses take the time to learn and understand interchange.  This is a mistake.  If you do not understand interchange it prevents you from effectively negotiating the fees that your company will pay when processing credit card transactions.

However, the reason this matters within the scope of this particular discussion is:

There is a special interchange tier for recurring billing transactions.

Few merchants take advantage of this cost optimization strategy.  In order to qualify for it, your business must first be on interchange plus pricing.  Secondly (and this is where most businesses completely fail), you must make sure that your transactions are coded correctly to qualify for recurring billing interchange.

Perhaps many businesses can't be faulted for not knowing that there is even a lower interchange rate tier for recurring payments, but, at least within Canada, it certainly does exist.  The interchange rates for recurring payments as of Feb 2019 are:

Visa Canada recurring interchange rate:

  1.37% - Classic, Gold & Platinum Cards

  1.56% - Infinite Cards

  1.95% - Visa Infinite Privilege


Mastercard Canada recurring interchange rate:

  1.30% - Core Cards

  1.42% - World Cards

  1.86% - World Elite Cards

These are very significant cost reductions.  For a business processing $1,000,000 per month in recurring payments, this would roughly equate to about $2,000 per month in rate savings, or more, depending on the type of cards you process.

The fact that you are aware that "recurring billing interchange" puts you in rare company.  However, being aware and taking advantage of the lower interchange rate are two different things…

Next you in part three we will explore how membership organizations can qualify for Recurring Interchange.

CRM Dynamics is an industry leader in providing associations with powerful CRM tools. Learn more about our Membership Association product, Dynamics Association Blueprint, here.

About the Author

David Goodale is CEO of, and is one of Canada's leading experts in the field of e-commerce payment processing.  Over the past 20 years, David has worked with thousands of merchants across Canada, the USA and throughout Europe.  David consults for large and complex e-commerce businesses on issues such as cross border payments, interchange optimization, and particularly on approval for hard-to-approve businesses such as airlines, travel businesses, crypto payments, and also for unique and interesting startups. 

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