What are 'Basis Point (BPS)'


Basis point (BPS) refer to a common unit of measure for interest rates and other percentages in finance. One basis point is equal to 1/100th of 1%, or 0.01% (0.0001), and is used to denote the percentage change in a financial instrument. The relationship between percentage changes and basis points can be summarized as follows: 1% change = 100 basis points, and 0.01% = 1 basis point.


The word "Plus" refers to the processor's markup that's applied to each credit card transaction. The markup is typically expressed as basis points (explained below) accompanied by an authorization fee.


It can get confusing to convert basis points to a percentage, to a decimal, or to figure out the charge resulting from a certain number of basis points. To make the task of converting and calculating basis points easy, we've created a basis point calculator that does the math for you.




How does the interchange plus pricing work?


Interchange plus pricing works much like the name implies - by applying a fixed markup to Visa, MasterCard or Discover's interchange fees. The markup applied to a credit card transaction often has two components: one is expressed as basis points and the other as an authorization fee. The type of card being used (debit, credit, personal, business, etc.), the way a card is processed (online, swiped through a machine, etc.) and other variables combine to determine which interchange category a transaction qualifies to, and ultimately the amount of the final charge.


Example of US Interchange Rates


Visa Debit

  • Debit Retail Swipe

  • Visa Debit CPS 0.800 % + 15¢

  • Visa Debit CPS Regulated 0.050 % + 22¢

  • Visa Debit Prepaid 1.150 % + 15¢

  • Visa Debit Business 1.650 % + 15¢

  • Visa Debit Business Regulated 0.050 % + 22¢

MasterCard Credit

  • Debit Retail Swipe

  • MC Debit 1.050 % + 15¢

  • MC Debit Regulated 0.050 % + 22¢

  • Visa Debit Prepaid 1.150 % + 15¢

  • Visa Debit Business 1.650 % + 15¢

  • MC Debit Prepaid 1.050 % + 15¢



Debit Keyed

  • Visa Debit Keyed CPS 1.650 % + 15¢

  • Visa Debit Keyed CPS Regulated 0.050 % + 22¢

  • Visa Debit Keyed Prepaid 1.750 % + 20¢

  • Visa Debit Keyed Business 2.450 % + 10¢

  • Visa Debit Keyed Business Regulated 0.050 % + 22¢

Debit Keyed

  • MC Debit Keyed 1.600 % + 1

  • MC Debit Keyed Regulated 0.050 % + 2

  • MC Debit Keyed Prepaid 1.760 % + 2



Visa Credit

  • Retail Swipe

  • Visa CPS Retail 1.510 % + 10¢

  • Visa Rewards Traditional 1.650 % + 10¢

  • Visa Rewards Signature 2.300 % + 10¢

  • Visa Rewards Signature Preferred 2.100 % + 10¢

  • Visa Corporate 2.100 % + 10¢

  • Visa Business 2.200 % + 10¢

  • Visa Purchasing 2.400 % + 10¢

MasterCard Credit

  • Retail Swipe

  • MC Consumer 1.580 % + 10¢

  • MC Enhanced 1.730 % + 10¢

  • MC World 1.770 % + 10¢

  • MC World Elite 2.300 % + 10¢

  • MC Corporate 1.900 % + 10¢



Keyed

  • Visa Keyed CPS Retail 1.800 % + 10¢

  • Visa Keyed Rewards Traditional 1.950 % + 10¢

  • Visa Keyed Rewards Signature 2.700 % + 10¢

  • Visa Keyed Rewards Signature Preferred 2.300 % + 10¢

  • Visa Keyed Corporate 2.950 % + 10¢

  • Visa Keyed Business 2.950 % + 20¢

  • Visa Keyed Purchasing 2.950 % + 10¢

Keyed

  • MC Keyed Consumer 1.890 % + 10¢

  • MC Keyed Enhanced 2.040 % + 10¢

  • MC Keyed World 2.050 % + 10¢

  • MC Keyed World Elite 2.950 % + 10¢

  • MC Keyed Corporate 2.650 % + 10¢


The markup assessed to a transaction is the same regardless of which interchange category a transaction qualifies to. The interchange charges and markup combine to yield the merchant discount fee, which is the merchant's cost to process the transaction.


What are the benefits of interchange plus?


Interchange plus is the most transparent, cost-effective form of merchant account pricing. The separation of processing costs with interchange plus also allows for the optimization of interchange expenses.


By passing interchange fees directly to merchants with a fixed markup, surcharges and hidden costs are generally eliminated. The cost of interchange plus processing will depend on the markup. However, interchange plus pricing will yield a substantial savings over the same processing volume when compared to other pricing models such as tiered or enhanced recover reduce (ERR).


Is interchange plus the best merchant account pricing?


Interchange plus is the most desirable form of merchant account pricing both for its transparency and potential to allow for lower costs. That's why processors must quote interchange plus pricing here at MNA.