For many years, merchants preferred to take cash for low-ticket items instead of cards because of the high interchange rates associated with them. However, less and less people carry cash on them, and it sometimes leads to frustration—have you ever tried to pay for something, only to realize that the merchant is cash-only or requires a minimum purchase to use your card? To avoid this kind of situation and to incentivize merchants to take debit cards for small-ticket transactions, both Visa and MasterCard have instituted policies that state that certain small-ticket merchants may qualify for lower interchange pricing.
Visa credit transactions that are $15.00 or less qualify for Visa’s CPS Small Ticket Interchange pricing. Card-present transactions that obtain customer’s signature, obtain and pass one valid electronic authorization, and settle within one day have a rate of 1.65% + $0.04 (not Signature Preferred). For card-not-present, the pricing is 1.80% + $0.10. If the sale settles within two days, the interchange rate is 2.30% + $0.10. For Visa debit, the interchange rate is 1.55% + $0.04.
MasterCard charges a Small Ticket Base rate of 1.55% + $0.04 and a Small Ticket Tier 1 base of 1.30% + $0.03. In order to receive these rates, the transaction must authorize and settle within one day and obtain and pass 1 valid electronic authorization. Additionally, Transactions under $25.00 do not need a signature. Unlike Visa, instead of having a blanket limit of $15.00 to receive small ticket pricing, certain industries qualify as “small ticket industries” and receive the lower interchange rate regardless of transaction amount. Qualified businesses are:
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