MasterCard interchange changes for Utility, Real Estate and Insurance merchants
Posted on Wednesday, October 15, 2008
MasterCard announced some changes to their interchange pricing today that will be effective October 3, 2008.
As some quick context if you are new to this. Here is an oversimplification: merchants pay fees to accept credit cards. Financial institutions that issue credit and debit cards make roughly 75% of the fees that merchants pay (merchant account providers charge the other 25% of the fees). When MasterCard makes changes to 'Interchange', they are adjusting the wholesale pricing of the fees that make up MasterCard and their financial issuing institution's 75% of fees. To the casual observer in this industry - these updates below won't make a lot of sense without some additional context.
Utilities
- Merchants no longer need to register for their Utility Program
- MC is discontinuing their Service Industries Incentive Program (SIIP). The SIIP program offered a lower discount rate and transaction fee. Utilities will now be charged a fixed fee per transaction which is lower on average than rates paid on SIIP and closer to pin debit rates.
Real Estate
- Discontinuing two Debit interchange categories (Merit III and UCAF), otherwise pricing stays the same.
Insurance
- Similar to utilities, discontinuing the discounted SIIP rates. Merit III, Merit I Merchant/Full UCAF Debit are no longer eligible.
Telecommunications
- Similiar to utilities and insurance, discontinuing the discounted SIIP rates but Merit III, Merit I Merchant/Full UCAF Debit are still eligible.
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