The short answer
Under tiered pricing, transactions are sorted into qualified, mid-qualified and non-qualified buckets priced at increasing rates. The processor writes the bucket definitions, so it can move a transaction type into a costlier tier without changing any advertised rate. Merchants routinely see 40-60% of volume land outside the qualified tier.
Why the headline rate is meaningless
A 1.69% qualified rate looks excellent until you learn that rewards cards, business cards, keyed sales and foreign cards are all non-qualified at 3.65% plus a per-item fee. Most consumer cards in circulation today are rewards cards.
The alternative
Interchange-plus passes the actual interchange category through at cost with a fixed, visible markup. Every transaction can be checked against published tables. There are no buckets to reclassify.
Key takeaways
- Bucket definitions are written by the party charging you
- Rewards cards dominate today's card mix and rarely qualify
- Interchange-plus removes the mechanism entirely
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