What is Interchange optimisation?

Techniques (Level 2/3 data, correct MCC, network token, right BIN routing) that qualify transactions for lower interchange categories.

Interchange optimisation refers to a set of processing techniques employed by a merchant or their payment service provider to qualify transactions for lower interchange fees.

These techniques typically involve providing additional data elements in the authorisation and clearing messages, such as Level 2 or Level 3 data for commercial cards, or ensuring the correct Merchant Category Code (MCC) is submitted.

The objective is to meet specific criteria defined by card schemes like Visa and Mastercard, enabling the issuer to apply a reduced interchange rate, which then translates into a lower overall cost for the acquirer and, consequently, the merchant.

For a merchant, successful interchange optimisation directly impacts the effective processing rate they pay for card transactions, particularly for business-to-business (B2B) sales where commercial cards are prevalent.

Merchants often see the benefits reflected as lower per-transaction fees on their processing statements, especially when their payment service provider passes on the savings achieved through these methods.

A common mistake is failing to provide the granular invoice and line item data required for Level 3 processing, which means such transactions are downgraded to a higher interchange category and incur unnecessarily increased costs, despite the merchant being capable of supplying the data.