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The networks get very little (IIRC a small flat fee per transaction on the order of 5 to 10 cents, but I don't have our pricing in front of me and it's some of

by Firehed 14y ago

The networks get very little (IIRC a small flat fee per transaction on the order of 5 to 10 cents, but I don't have our pricing in front of me and it's some of the most opaque pricing you'll ever see) - most of interchange goes to the issuing bank. Blame the banks issuing credit cards for the high rates, not Visa and MC (both AmEx and Discover are, effectively, their own issuing banks - so go ahead and give them their fair share of the blame)

sjtgraham 14y ago
Interchange goes to Visa, MasterCard, et al not the issuing bank. This is their vig.
- Firehed 14y ago
  Sorry, no. Fees are paid to the issuing bank, acquiring bank, and network. The majority of it goes to the issuing bank, and that's the non-negotiable rate when you get a merchant account. That fee is known as the interchange fee. The processing fee is something you negotiate with your gateway and/or acquiring bank. I work in the industry; it's my job to know how this works. Here is an example from Wikipedia (bear in mind the amounts are fictitious but relatively accurate): http://en.wikipedia.org/wiki/File:Gao-report-on-interchange.gif http://en.wikipedia.org/wiki/File:Gao-report-on-interchange....
  - sjtgraham 14y ago
    It's great to know that you work in the industry, but it's irrelevant; argumentum ad verecundiam is a logical fallacy and only serves to demean your argument. To address your point, I understand interchange as being set and collected by the card network, and is non-negotiable. Anything off the top is left for the banks to keep for themselves, e.g. the plus in "interchange plus" pricing). Another example assume a hypothetical interchange of 1.5% and a merchant that has a merchant account that costs 3.5% + 30¢ (gateway) per transaction. In this case the card network takes 1.5%, the gateway 30¢, and the banks 2%. Is this not how it works? It would be nice if you could cite something (not trying to be an ass in case it reads that way :).

by Firehed 14y ago

sjtgraham 14y ago

Interchange goes to Visa, MasterCard, et al not the issuing bank. This is their vig.

Firehed 14y ago
Sorry, no. Fees are paid to the issuing bank, acquiring bank, and network. The majority of it goes to the issuing bank, and that's the non-negotiable rate when you get a merchant account. That fee is known as the interchange fee. The processing fee is something you negotiate with your gateway and/or acquiring bank. I work in the industry; it's my job to know how this works. Here is an example from Wikipedia (bear in mind the amounts are fictitious but relatively accurate): http://en.wikipedia.org/wiki/File:Gao-report-on-interchange.gif http://en.wikipedia.org/wiki/File:Gao-report-on-interchange....
- sjtgraham 14y ago
  It's great to know that you work in the industry, but it's irrelevant; argumentum ad verecundiam is a logical fallacy and only serves to demean your argument. To address your point, I understand interchange as being set and collected by the card network, and is non-negotiable. Anything off the top is left for the banks to keep for themselves, e.g. the plus in "interchange plus" pricing). Another example assume a hypothetical interchange of 1.5% and a merchant that has a merchant account that costs 3.5% + 30¢ (gateway) per transaction. In this case the card network takes 1.5%, the gateway 30¢, and the banks 2%. Is this not how it works? It would be nice if you could cite something (not trying to be an ass in case it reads that way :).