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Part 5 of 7 · Card fee auditor series ~5 min read

Comparing two providers without being lied to

Every merchant services quote is constructed to be incomparable with every other one. Four questions and your own effective rate make them comparable anyway.

Key takeaways

  • Ask what card mix the quote assumes. If the answer is vague, the quote is vague.
  • Blended pricing hides which transactions are expensive. IC++ cannot.
  • Get every fixed monthly fee in writing, including the minimum charge.
  • The notice period decides whether you can act on any of this.
  • Restate every quote as an effective rate on your own last twelve months.

Blended against interchange-plus-plus

Two quote structures restated against your own card mixThree boxes across the top outside the AWS account. A Blended quote, one rate for everything. An IC++ quote, interchange plus scheme fees plus your margin. And Your card mix, from the last twelve months. The first two connect as offered; the third is labelled the denominator. Inside the account, three components. Restate both as an effective rate. On your data, not on a worked example. And One number each, now comparable. A note says two quotes and your own transactions, and that without the third input the first two cannot be compared, which is the entire reason quotes are structured the way they are.AWS ACCOUNTBlended quoteone rate foreverythingIC++ quoteinterchange + scheme+ your marginYour card mixfrom the lasttwelve monthsRestate bothas an effectiverateOn your datanot on aworked exampleOne number eachnow comparableas offeredas offeredthe denominatorTwo quotes and your own transactions. Without the third input the first two cannot be compared, which is the entire reason quotes are structured the way they are.
Fig 1. A blended rate and an IC++ rate are not the same kind of object. Your own card mix is what converts both into a number you can put side by side.
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Why IC++ is the more honest structure

Under interchange-plus-plus the statement shows interchange at cost, scheme fees at cost, and the provider’s margin as a separate line. You can see all three. Under blended pricing you get one rate covering everything, which means the provider absorbs the variation — and prices that risk into the rate.

Blended is not a scam and for a very small merchant with a simple card mix it can be cheaper. But it is unauditable by construction: if you cannot see interchange, you cannot know whether a rate increase came from the schemes or from your provider deciding to take more.

The four questions

  • What card mix does this rate assume? Consumer debit, chip and PIN, UK-issued? Then say what happens to corporate, overseas and keyed-in.
  • Is this blended or IC++? And if blended, what happens when interchange changes — who absorbs it?
  • What are the fixed monthly fees? All of them: terminal, gateway, PCI, minimum service charge, statement fee.
  • What is the term and the notice period? This is the answer that decides whether the other three matter.

The field that decides everything

Working backwards from the contract term end to the decision dateA horizontal row of four boxes joined by arrows. Term ends, the date everybody remembers. Minus notice, three to six months. Minus a tender, six weeks to compare properly. Decide here, months before you expected to. A note says missing this date means the contract rolls, usually for another year, at whatever rate it rolls at, and that it is the most expensive field in the agreement.WORKING BACKWARDS FROM THE TERM ENDTerm endsthe date everybodyremembersMinus noticethree to sixmonthsMinus a tendersix weeks tocompare properlyDecide heremonths before youexpected toMiss this date and the contract rolls, usually for another year, at whatever rate it rolls at. It is the most expensive field in the agreement.
Fig 2. The rate is what everybody negotiates and the notice period is what determines whether you ever get to. It is stored as a precomputed date for exactly that reason.

That is why the accounts table in part seven stores notice_by as its own field rather than deriving it. It is the one date in this entire system that has to fire whether or not anybody ever opens the record again.

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