Payment Glossary
The payment industry loves jargon. Here's what it all means.
A
Assessment Fee
Pricing
A fee charged by card networks (Visa, Mastercard, Amex) on every transaction for using their network infrastructure and brand. Also called scheme fees or network fees. Assessment fees are typically a small percentage of transaction volume (0.13-0.15% for Visa/Mastercard) plus per-transaction fees. Unlike interchange which goes to issuers, assessments go directly to the card networks.
Acquirer Markup
Pricing
The fee charged by the acquiring bank or payment processor for their services, representing their profit margin on transactions. In IC++ pricing, this is the only negotiable component. Typically expressed as a percentage plus fixed fee (e.g., 0.2% + $0.10). Markup varies by merchant risk, volume, vertical, and competitive factors.
B
Blended Rate
Pricing
A pricing model where the acquirer charges a single flat percentage for all transactions regardless of card type or interchange category. Simple to understand but often more expensive than IC++ for merchants with diverse card mixes. The acquirer calculates an average rate and takes margin on the spread between actual interchange and the blended rate charged. Common with PayFacs and mainstream PSPs targeting smaller merchants.
Basis Points
Pricing
A unit of measurement for percentages, where 1 basis point equals 0.01%. Used extensively in payments pricing discussions. 100 basis points = 1%. When negotiating rates, a reduction from 2.9% to 2.7% represents 20 basis points. Useful for discussing small but meaningful rate differences on high-volume accounts.
I
Interchange Fee
Pricing
The fee paid by the acquiring bank to the issuing bank each time a card transaction is processed. Set by card networks (Visa, Mastercard), interchange varies based on card type (debit vs credit, rewards vs standard), merchant category code, transaction type (card-present vs card-not-present), and geography. Interchange typically represents the largest component of payment processing costs, ranging from 0.2% for regulated debit to 2%+ for premium rewards cards.
Interchange Plus Plus (IC++)
Pricing
The most transparent pricing model in payments, breaking costs into three components: actual interchange (paid to issuer), scheme fees (paid to card networks), and acquirer markup (the processor's profit). Merchants see exactly what each transaction costs and can optimize accordingly. IC++ typically benefits larger merchants ($100K+/month) with diverse card mixes and becomes available at higher volumes.
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