Interchange and How to Maximize it at your Financial Institution
An interchange fee is a charge determined on a card payment and functions as the merchant’s compensation for processing the transaction. Interchange is set by various card networks such as Mastercard, Discover and Visa.
So why is it so important where the transaction is directed and the impact on your income?
Transactions can be directed towards Signature or PIN and have different interchange rates depending on the way in which they are processed. PIN transactions are routed through a PIN debit network which means that as a merchant there are debit network fees associated with these transactions. PIN transactions often have a higher per transaction fee rate compared to Signature transactions and remain fixed regardless of the dollar amount of the transaction.
To take control of your interchange and improve your card portfolio opting to direct towards Signature transactions which generate the highest interchange revenue can help to maximize your interchange income.
Combining the move to opt out of PINLess Debit and shifting towards signature transactions can have the potential to notably increase your revenue. This strategy also has a significant advantage of not having fraud charged back to the merchant.
Understanding how to maximize your debit card portfolio has the ability to increase your revenue and transform your financial institution to a higher level of profitability.
Set up a call with us today to discuss opportunities for your community bank or credit union today!