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
If the phrase interchange has you confused, it simply means the cost that
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
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.
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