What is Interchange Pass-Through pricing?


Interchange Pass-Through Pricing, typically is reserved for high volume merchants such as franchises and “Big box” stores. These businesses are billed the actual wholesale cost directly from Visa, MasterCard and Discover, plus a small processing fee from their servicing provider.

Most small businesses are typically on traditional “three tiered” pricing model. While a three tiered pricing model may be simple to understand, it does not provide the best savings option for a merchant. The three tier pricing plan consists of three “buckets” with a qualified, mid-qualified and non-qualified rate. Another popular pricing model is a” flat rate” program. Again, while is simple to understand it does not provide the best savings option for a merchant.

Interchange Pass-Through Pricing is a Wholesale Plus Pricing model. This means the actual “interchange” or wholesale cost is passed through directly to the merchant. These are the same wholesale rates as the big box stores such as Target and Walmart.

In October, 2011 The Durbin Amendment went into effect. The Durbin Amendment puts a cap on the wholesale cost of all regulated debit transactions at 0.05% + $0.22. If you are a merchant that is currently not on interchange pass-through pricing, then most likely you are not receiving any of the benefits of The Durbin Amendment. Therefore, when your customers use their debit cards for your services, the only benefit is to your current merchant service provider.