Exploring Different Payment Methods

All businesses that accept credit cards should make it their mission to understand the different methods in which they can run a transaction. Depending on the payment type the merchant chooses (or selects), they could actually be paying more per transaction than necessary. Each payment method has it's own interchange costs associated with running a transaction. To understand what interchange is and why you pay it, take a look at our article about interchange. In order to save money and provide safe transactions to your customers, merchants should choose the most appropriate payment method that compliments their business needs. This article will cover the different kinds of payment methods to help you make the most informed decision for you and your business.

EMV (Europay, Mastercard, VISA)

EMV (Chip) or dipped transactions are essential for any card-present business. Since its 2018 inauguration in the US, we have experienced a dramatic decrease in card-present fraud. The interchange amount for running a VISA EMV debit transaction is .05% + 21 cents. However, for a VISA credit transaction using EMV, the interchange is 1.51% + 10 cents. This payment method, when combined with PIN debit transactions, is the most secure. Since their invention, we have not experienced any duplication of chip cards.

Swipe (Magnetic Stripe) :

Swipe transactions are the older way of running sales using the magnetic strip of a card. This method is no longer the preferred method as customers are allowed to file a dispute for fraud since magnetic strips can easily be replicated with inexpensive equipment. The interchange for VISA magnetic strips, for debit and credit is the same as EMV since they are both car- present transactions.

MOTO (Mail Order Telephone Order):

MOTO transactions are Mail Order Telephone Order transactions. These transactions are considered to be card-not-present as these are usually taken without the customer being physically present. Most common businesses that use MOTO transactions are pizzerias or hotels.

These types of transactions pose a higher risk to all parties therefore they do have a higher interchange rate along with a higher cost to the business owner. For a debit VISA MOTO transaction the interchange fee is 1.65% + 15 cents. For a credit transaction, the VISA interchange fee for MOTO is 1.8% + 10 cents.  

Pin Debit:

Pin debit transactions pose the lowest risk as they present a card-present transaction; This eliminates the probability of fraud tremendously. When pin debit is combined with EMV consumers cannot file a fraud related chargeback against a merchant. This works in the businesses favor. This payment method has the same interchange rate as EMV for both credit and debit.

eCommerce:

eCommerce transactions are specifically for online payments. Like MOTO transactions, eCommerce transactions do not have an in-person customer and therefore pose a bigger threat to all parties involved due to the higher risks that come with this type of transaction.

For this reason, the interchange on eCommerce transactions are the same as MOTO transactions.

Now that you understand the different payment methods and their interchange rates... you can pair your business with the right processor!

Compared to our competitors, we save our merchants on average 20-30% for payment processing. We include interchange in our rates to make our pricing simple and easy to understand. If you are an eCommerce business, or if you use MOTO transactions, you will definitely benefit and save your business money by switching to Redde! We strive to educate our merchants on the payment industry, as well as maintain transparency with our pricing. Let us help you save money with better solutions and support. Switch Now!