What Are Interchange Rates And Why Should I Care?

We'll walk you through understanding interchange rates.

Interchange plus pricing may not be the most exciting topic in the world, and you may never intentionally bring it up at the dinner table. But, stick with me, and you'll be equipped with knowledge that will save you and your organization significant dollars AND help you know more than the majority of your peers. Win Win.

What Is Interchange?

Simply put, Interchange is a fee charged by the major credit card payment networks (Visa, MasterCard, Discover, and American Express) to a merchant's bank in exchange for processing a payment. These fees can vary, based on the card type, whether or not it's a rewards card, credit vs debit card, and many other factors. Currently there are over 470 different interchange rates! 

Because these rates are set by each payment network, these fees are required to process payments online. Additionally, these rates are set and sometimes revised twice a year in April and October.

Rates vary from card to card, but in general debit cards have the lowest interchange rates while American Express has the highest. For example, a card-not-present rate for a VISA debit card is 0.65% + $0.15 per transaction while American Express would charge a fee of 3.80%.

ACH Fees

ACH is the equivalent of paying with an electronic check. Sometimes you'll hear this referred to as eCheck. In the technical sense, Interchange doesn't include ACH transactions, but for My Well Ministry, we consider interchange to be any of the base fees that we can't alter. This includes transactions paid via a bank account and gateway transaction fees.

ACH transactions are governed by a completely separate organization called NACHA. While many organizations have begun to charge a percentage based fee for ACH transactions, the actual Interchange rate is 0% + $.30 per transaction. As you can see, there are huge savings involved in encouraging people to leverage a bank account.

Why Should You Care?

Congratulations! You made it this far. Why does all this matter? Interchange Plus Zero pricing is the absolute cheapest rate you can get for processing payments online. (Read more about Interchange Plus Pricing.) It's the only way you'll be able to make every dollar you receive go as far as possible. All other rates, while they may seem simpler, are adding profit on top of the Interchange rate. This isn't inherently bad—this is how payment processing companies, and often other software companies, make their money. We believe it should be different for faith-based nonprofits.

Let's say you process $1,000,000 each year and your average interchange rate across all payment types is 1.75%. A typical payment processing company may add an additional 1.15% on top of that amount, coming to a grand total of 2.9%. With Interchange + 0% pricing, you would save $11,500 every single year.

My Well Ministry is a nonprofit. You are a nonprofit. You have a vision to make your community a better place, and it takes money to bring your mission to life and make a difference. We want to help you keep as much of that money within your organization. 

Whether you choose to partner with My Well Ministry or go with a different processor, remember to ask for Interchange Plus Zero pricing so you can be a better steward of your organization's dollars.