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July 24 , 2017 • Issue 17:07:02
Getting a handle on

interchange - Part 2

Understanding and demonstrating how these pricing
strategies benefit merchants isn't simple, however. "For
many people it can seem overwhelming," said Anne
Mellin, Division Sales Director at Beyond Inc. "Most of the
time, [merchants] get glassy eyed and confused. All they
really want to know is what the bottom line is."
Mark Dunn, President of the bankcard consulting firm
Field Guide Enterprises LLC, concurred. Dunn, who trains
merchant level salespeople (MLSs), said one mistake many
MLSs make is trying to explain interchange to merchants,
when all merchants really want know is what it will cost
them to accept cards: the effective cost.
"Explanations of interchange are where sales go to die,"
said Dunn, who sometimes tags along and observes clients
on sales calls. "I've seen reps launch into discussions of
By Patti Murphy and Dale S. Laszig interchange, and the sales just evaporate."

nterchange is a critical component of the bankcard Allan Lacoste, bankcard consultant to Pivotal Payments
business. Originally designed to compensate card Inc., said he counsels agents to "stick to the basics" when
issuers and bankcard networks for the cost and discussing interchange with prospects. Lacoste trains
I risk of clearing transactions, it has evolved into a agents to keep conversations about interchange and
marketing tool for card brands and merchant service pro- merchant statements short and informative.
viders. Today's interchange grid encompasses hundreds
of individual rates that vary by merchant category, card Most merchants understand they have little to no control
types and authorization methods and other factors. over what interchange rates apply to their transactions,
Dunn added. "The most important consideration is that
"In the beginning of this business, there was one price. they buy from somebody who can answer questions
My buy rate was 1.59 percent and 20 cents, and I marked directly and provides a good competitive [merchant
it up accordingly," said Richard Wactlar, Chief Executive discount] rate," he said.
Officer at The Business Link in Clifton, N.J. "Today we
have 700 rates." Contributed articles inside by:

While complex and potentially intimidating, today's varied Aaron Nasseh .........................................................................................33
interchange structure creates significant opportunities for
ISOs and the feet on the street. When Visa and Mastercard Josh Herndon.........................................................................................36
introduce new interchange categories they "seed the Jeff Fortney .............................................................................................38
market," establishing new avenues of growth for merchant Mike Ackerman ......................................................................................39
portfolios, said Todd Ablowitz, President of the research
and consulting firm Double Diamond Group LLC. TOC on page 3

Continued on page 31