Truevo serves the payment needs of a wide umbrella of businesses. We make it easier to accept payments and run your business.
Offer a competitive payment platform for your customers. Our payment solutions facilitate ecommerce and point-of-sale (POS) payments.
If you’re running an online business, you probably process a large amount of card payments every day. You might wonder what are you paying for, and how are card processing fees calculated?
Acquirers charge fees according to different pricing models. They generally use two models to calculate these fees. They are the blended rate model, also known as the MDR model, or the Interchange++ (IC++) pricing model.
Under the IC++ pricing model, businesses pay for every debit or credit transaction they complete. Fees vary from transaction to transaction and bank to bank and can sometimes be very difficult to calculate.
At Truevo we want to ensure that you have all the information you need to calculate your costs. Let’s have a look at all the factors that affect interchange++ fees and how Truevo calculates these fees.
Every time a business completes a transaction via a card scheme (either Visa or Mastercard), the acquiring bank or acquirer, pays the cardholder’s bank an interchange fee. The business then pays the interchange fee back as part of its card processing fees.
Processing any card payment involves three fees:
Of the three fees, the interchange fee is normally the largest.
In the EU & EEA, interchange fees are regulated and are capped at maximum 0.20% for consumer debit cards, and maximum 0.30% for consumer credit cards. Other cards such as business cards may have higher interchange fees that can sometimes be as high as 1.50% or even 2.00%.
Card schemes like Mastercard and Visa determine their fees. These fees are non-negotiable.
Truevo holds transparency in high regard and publishes our scheme fees for merchants on the IC++ pricing model on the Truevo website.
Various factors influence how these fees are calculated. It all comes down to how much risk is involved in the transaction.
The IC++ pricing model has its advantages, such as transparency, and you are sure that you always pay the same margin to the Acquirer, and there are no hidden costs. The disadvantage is that at the moment of the transaction you don’t know in advance what the costs will be, and that it is more often difficult to reconcile your costs.
The blended pricing model charges an average processing cost plus a fixed markup. Merchants are charged the same end price irrespective of the type of transaction. You can’t see how the costs are split either. This model might be easier to understand and has advantages if you’re looking for simplicity and knowing your costs in advance.
In 2015 the European Economic Area (EEA) introduced interchange fee regulation. It meant that interchange fees are heavily regulated resulting in some of the most competitive fees worldwide.
If you’re a merchant operating in the UK or EU, have a look at Truevo’s transparent scheme fees here, you won’t be disappointed. If you’d like to find out more, get in touch with us here. We can’t wait to help you get paid and help you save on fees.
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