Question
How are Interchange Plus (IC+) fees calculated?
Answer
Example Calculation:
Let's say a restaurant makes a $10 sale with an Interchange Plus pricing structure.
If the card used to pay for the meal has an Interchange rate of 1.80% + $0.20, the restaurant will pay (1.80% x $10) + ($0.20 + 1 transaction) = $0.38 in interchange fees
Let's say for network fees, there is a 0.20% rate charged (this rate is also set by the networks), 0.20% x $10 = $0.02 in Network Fees.
Now let's take a look at the Plus portion of this rate structure.
Using the same example, if the restaurant is paying Interchange (Cost) + 0.50% + $0.10, then the Plus (also known as the markup) would be 0.50% of their volume and the $0.10 per transaction.
On the same $10 sale, the markup will be: (0.50% x $10) + ($0.10 x 1 transaction) = $0.15 in "Plus" fees This gets paid to Toast.
The restaurant will pay $0.55 TOTAL for this $10 transaction