Cool, thanks for the reply. That makes more sense.

How much volume do you guys handle?

Good plan. This is exactly what we do. Keeps us out of the race to the bottom.

Exactly :-) We're here to compete on revenue lift + value-add. If we do not generate significantly more revenue than we charge, our customers turn us off.

I didn't start with a complaint, just an observation.

The CEO made it clear those rates are essentially a tax paid by unsavvy engineers that haven't shopped for rates because they aren't actually interested in setting competitive rates.

The real market rate for interchange is FAR lower than those described here, and from the replies you'll see that even here on HN there are a lot of tech smart, finance dumb engineers that didn't know that they're throwing away a big chunk of their revenue by taking the shelf rate for payment processing.

Smallco can do interchange plus too. It's more daunting, but almost always a better option.

2.0% blended does actually cover premium segment cards on a per transaction basis even at the top-end shelf rate depending on how you've structured your payment processing pipeline. Fully international transfers on high-end cards often cost less than intra-jurisdictional premium card purchases. Shelf rate, you're looking at 2.7 in the worst case without negotiation or any work on the part of the merchant.

But even if didn't - premium card penetration isn't very high.

So why are you paying for the full premium card interchange on every transaction?

Your merchant agreement restricts how you can do it, but you can provide incentives to use different payment venues. You don't have an incentive to push people towards low-interchange channels if you're getting fleeced on every channel.

Given the difference for a 10% margin product purchase between a 1.0 and 3.0 blended rate processor is literally a 28% difference to your bottom line, getting on top of the minutiae of your agreement is tremendously important.

Very true, interchange plus is the way to go outside of Europe or Durbin-regulated customer bases.

This is where the EU is working: they just capped interchange fees.

I was going to guess that there are lower fraud rates in the EU compared to the US; based on what my former partner said, their company reports all EU fraud, but only fraud in the US over 2k USD. In addition to that, people in the US treat (abuse) consumer protections like a "get a free purchase/built-in scam protection", and try buying iphones for $260 on p2p apps from a complete stranger.

There could be something else there, though.