Have you ever heard of small merchant interchange?

The largest card network, also known as Visa, is giving merchants a discount on interchange. As in, an actual cost reduction! Interchange rates for merchants in the U.S. are some of the highest in the world. Visa is providing great relief for many merchants, especially those still recovering from the COVID-19 pandemic.

Who qualifies?

Visa’s threshold for “small” is any merchant processing less than $250,000 in Visa Consumer Credit sales per year. This volume is identified by using a merchant's Tax Identification Number (TIN). If you have multiple merchant accounts under the same TIN/EIN, volumes will be aggregated here.?

Volumes for other card networks like MasterCard and American Express are excluded, so this is solely for Visa transactions.

This is not to be mistaken with small ticket interchange, which are interchange discounts on transactions under $15.00.

How much are the discounts?

There is no universal discount. On average, these interchange rates drop by about 12-15%. This might not be massive savings to your business, but it is an easy way to reduce fees without having to do anything.

Assuming you are on interchange-plus pricing and your processing statements have a transparent interchange section, you should be able to tell if any Visa transactions are qualifying.

Look for “Small Merchant” in the interchange section like the ones highlighted below.

What about flat rate pricing merchants?

Unfortunately, if you are on flat rate pricing, these discounts will actually benefit your payment processor by increasing their margins on eligible transactions.?

For example, say you use Stripe and pay 2.90% and $0.30 per transaction, which includes interchange. If your interchange rate on a small merchant transaction drops from 1.51% to 1.29%, you are still paying 2.90% and $0.30. Instead, Stripe just earned an additional 0.21% of margin on that transaction.

This is one reason why I think interchange-plus pricing is the best. If you have not read my previous article about interchange-plus pricing, check it out to get a better idea of what I am talking about.?

Small merchant interchange is a newer update that recently went into effect as of April 2022. Merchants should reach out to their processors to ensure they are receiving the benefits, as well as, review their statements to see if they are qualifying.

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