Is “Interchange Minus” The New Price Point for Merchant Services?

Pricing for merchant services has become extremely competitive in the last few years. Merchant pricing awareness has shifted the market pricing away from complex multi-tiered pricing to simpler ‘Cost Plus’, ‘Pass Through’ or ‘Interchange Plus’ pricing. Now, Interchange Plus pricing, has become competitive as well with some merchants in competitive markets paying Interchange + 0bps, creating significant margin compression for ISO’s and Acquirers.

With Interchange Plus being very competitive, how can ISOs and Acquirers sell at ‘Interchange Minus’ and still maintain profitability? Answer: PayVus® from Aliaswire.

Unlocking a new revenue source

To understand how PayVus® from Aliaswire works, first let’s go back to the fundamentals of Interchange. For card issuers, Interchange is a source of revenue. For acquirers, Interchange represents a cost. For Merchant Acquirers, Interchange must be marked up or passed through to their merchants, along with other value-added services in order to maintain a viable business. Merchant Acquirers only see revenue when their merchants sell and accept payments. On the other side, Issuers see revenue whenever their cardholders spend. With PayVus® from Aliaswire, Merchant Acquirers can derive revenue not only when their merchants sell but also when their merchants spend enabling Merchant Acquirers to unlock a significant revenue potential for the first time.

With PayVus® from Aliaswire, ISO’s and Acquirers can now derive revenue from Merchant’s spending activity. PayVus® merchants are issued a MasterCard World Business Credit Card and a portion of their daily deposits are settled to their PayVus® Credit Card. PayVus® pays a residual revenue share to the merchant acquirer for all the funds settled to the PayVus® Credit Card. The merchant acquirer can then pass on a portion of their revenue share to the merchant further reduce merchant processing fees.

With PayVus®, merchants get a MasterCard credit card with up to $10,000 line of credit that they can use to pay for supplies, inventory and everyday business expenses and merchants receive lower fees from their merchant acquire. ISO’s and Acquires can unlock an entirely new source of revenue and provide a competitive offering in the market to them attract and retain more merchants. When a PayVus® merchant sells and spends, they save, and ISO’s and Acquirers get a revenue boost.

The PayVus® solution is a turn-key program designed for merchant acquirers can handles card issuing, automatic split funding settlement, revenue share distribution and residual reporting.

Getting to Interchange Minus

By enrolling in the PayVus® program, the merchant acquirer will receive a significant revenue share from all of the funds deposited to the PayVus® credit card. The merchant acquirer can designate a portion of their revenue share direct to the merchant. Depending on how much of the revenue share that merchant acquirer passes on can have a dramatic impact on the overall merchant services fees. For example, a merchant priced at a blended rate of 2.0%, has the capability to reduce fees to a mere 0.75% – basically going from Interchange flat to Interchange minus 125bps, in merchant fees per transaction. In this case, the same merchant would now only be paying $5,250 in total yearly interchange, compared to $14,000 – thereby saving $8,750 every year. When you merchant saves, you win!

Payvus® not only helps ISOs and Acquirers enable new revenue streams, but also helps merchants attain Interchange Minus pricing, thereby leading to increased revenue and big savings on interchange fees.

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