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Interchange Optimization

Interchange Optimization

Interchange optimization is one of the most overlooked techniques to help you reduce your merchant account fees. If you want the lowest rates for your merchant account then it pays to know how credit card interchange works, and what you can do to leverage it.

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What Are Interchange Rates?

In general, interchange rates are fees that merchants pay to card issuers like Visa, Mastercard, and American Express for the ability to accept their type of card. These fees are determined by a variety of factors, including the type of card used, the type of transaction (e.g., swiped, keyed-in, online, etc.), and what industry you’re in. Now, let’s take a look at how these rates can be reduced by understanding your payment transactions.

What Is Interchange Optimization?

Interchange optimization is the process of strategically selecting the type of interchange rate that will apply to a particular transaction. By choosing the right interchange rate for a transaction, merchants can potentially lower their overall payment processing fees.

How Can I Optimize Interchange Rates For My Merchant Account?

The key to optimizing interchange rates is to ensure that transactions qualify for the lowest possible interchange rate. In order to achieve this, best practices for processing transactions should be followed, such as correctly entering card data, using the right authorization methods, and processing transactions in a timely manner.


Negotiating with your payment processor is another crucial aspect of interchange optimization. In the same way that a skilled negotiator can strike a deal, you can negotiate interchange rates with your payment processor. Make sure you ask questions, compare rates, and understand the contract terms. It is important that your payment processor is your partner in crime, working with you to find the most cost-effective solution for your merchant account.

How Can I Qualify For The Lowest Interchange Rates?

To ensure that your transactions qualify for the lowest interchange rates, here are some tips:

  • Use card-present transactions whenever possible: Card-present transactions, where the customer’s physical card is swiped or dipped into a card reader, typically qualify for the lowest interchange rates. Since the card is physically present, these transactions are lower risk.
  • Avoid manual entry of card data: Keying in card data manually, also known as card-not-present transactions, typically result in higher interchange rates as they are considered higher risk. When possible, avoid manually entering card data to optimize interchange rates.
  • Include all required transaction data: Ensure that all required transaction data, such as the card’s expiration date, CVV code, and address verification, is included when processing transactions. The result is reduced fraud risk and lower interchange rates.
  • Settle transactions promptly: Settling transactions promptly, usually within 24 to 48 hours, can help keep costs down. In contrast, delays in settlement can result in higher interchange rates, so it’s important to settle transactions quickly.

How Can A Payment Processing Company Help With Interchange Optimization?

A payment processing company should be your guide when it comes to the best interchange rates for your company. They can provide you with tools and resources to help you understand how transactions are charged and what’s the best model for your businesses. 


Moreover, they can also offer guidance on how to choose the right payment processing solution that aligns with your business needs and goals, and that can help you achieve the lowest possible interchange rates.

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