Card Mix

The combination of card types you accept each month is known as your “Card Mix.” This mix changes monthly, affecting your overall processing costs. For example, let’s assume you process 1,000 transactions totaling $40,000 in both July and August. One might expect your “Effective Rate” to remain the same, but that’s not the case.

Why Doesn’t the Effective Rate Stay the Same?

What Are Interchange Fees?

Interchange fees are the costs associated with different interchange categories, each with specific requirements. When a transaction meets these requirements, it is charged the corresponding interchange fee.

Example: The Impact of Different Card Types

July Card Mix:

  • Mastercard World Elite:
    • 50 transactions
    • o$5,000 total sales
    • o2.50% + $0.10 per transaction interchange fee
    • Total interchange fees: $130
  • Visa US CPS/Small Ticket:
    • 100 transactions
    • $5,000 total sales
    • 60% + $0.05 per transaction interchange fee
    • Total interchange fees: $85

Total Interchange Fees for July: $215

 

August Card Mix:

  • Mastercard World Elite:
    • 100 transactions
    • $5,000 total sales
    • 50% + $0.10 per transaction interchange fee
    • Total interchange fees: $135
  • Visa US CPS/Small Ticket:
    • 50 transactions
    • $5,000 total sales
    • 60% + $0.05 per transaction interchange fee
    • Total interchange fees: $82.50

Total Interchange Fees for August: $217.50

Analyzing the Difference

In this example, switching the number of transactions between two card types resulted in different total interchange fees, despite the same total sales amount. In August, the fees were $2.50 higher than in July. This demonstrates how variations in your Card Mix influence your overall processing costs.

Due to the numerous card types and their specific fees, your total interchange fees and effective rates will fluctuate each month. Understanding your Card Mix and how it affects your costs can help you better manage and predict your processing expenses