How can payment operators see what interchange costs their merchants?

By reconciling settlement files with transactions, fee by fee. Reconciliation and settlement views break down interchange, scheme fees and markups, and routing rules can send each transaction to the provider with the best cost for it.

Why the number is hidden

Merchants see a blended rate or a monthly statement; interchange, scheme fees and the acquirer's markup are mixed together. Operators that run several acquirers see several statement formats. To know what a transaction cost, someone has to match each settlement line to its transaction and split the fee into its parts.

Reconciliation fee by fee

• Import each acquirer's settlement file and match every line to a transaction, using the acquirer reference and the amount.
• Break down the fee into interchange, scheme fee and markup, where the file provides it, or estimate it from the card type and region.
• Report the effective cost per merchant, per card type, per country and per provider.

What to do with it

Two things. First, show merchants their real cost, which is a sales argument against blended pricing. Second, route transactions to the provider with the best cost for that card and market: a domestic debit card and a foreign commercial card do not cost the same everywhere. Routing rules can use the card's BIN data and the reconciled costs to pick the acquirer, and the next month's reconciliation shows whether the rule paid off.