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Equity Commerce Rates

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Rob Wu

05 Nov, 2010 05:23 PM

We're completing our merchant account application via Equity Commerce, and I'm having a little bit of difficulty understanding the rates (sorry I'm new to this).

From what I understand the bulk of the rates is a combination of a % volume + transaction fee.

On the fee schedule, what does a "pass thru of 30bp" mean? Is the authorization fee the transaction fee?

1. Support Staff 1 Posted by Marc Guyer on 08 Nov, 2010 08:03 PM

   

   The main fee is "interchange". This is a standard fee across all merchants no matter who the bank is. Interchange is a published rate, which in itself is difficult to understand. It is what it is, however. The VISA chart is here: http://usa.visa.com/merchants/operations/interchange_rates.html

   There are two ways to bill for interchange. One is called Discount Rate and the other is "Interchange Plus". A discount rate is a somewhat high percentage that stays the same for every transaction. It tends to be high (usually around 2.2-3.5%) because the bank is taking the risk of the interchange rate. They must cover the cost of interchange so they want to make sure they pass it onto you (and make some money in the process). "Interchange Plus" pricing is what EC uses. This means that the actual interchange rate for each transaction is passed through and marked up by a small amount by the bank (called Basis Points). So, for example if the markup is 30 BP and the interchange is 1.6%, the effective rate would be 1.9%. A Basis Point is one hundredth of a percent. So, for 30 BP, add 3 tenths of a percent to interchange.
   

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2. 2 Posted by Rob Wu on 09 Nov, 2010 05:23 PM

   

   This is very helpful. Thanks for walking me through this!

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3. Dean closed this discussion on 16 Jan, 2013 02:59 PM.