ISO identifies $5.9M a year across a network fee review and an interchange review
Two separate reviews at this sub-$5B US ISO, one on network fees and one on interchange, found $5.9M a year between them, 10-15 bps of processing volume.
| Client type | ISO |
|---|---|
| Size | Under $5B annual processing volume |
| Market | United States |
| Scope | Two reviews: Visa and Mastercard network fees, and interchange |
| Analysis time | 4-6 weeks |
| Line items flagged | 130 |
| Network fee review | $2.6M a year |
| Interchange review | $3.3M a year |
| Potential savings, total | $5.9M a year |
| Savings relative to volume | 10-15 bps |
What did the review find?
The network fee review found $1.9M a year in fee reductions, from best practice changes and services the ISO didn't need, plus $0.6M from passing network costs through to merchants.
The separate interchange review found $3.3M a year from transactions not qualifying for the best available rates and from incentives for sending additional transaction data. Across both reviews, 80% of the identified savings was rated medium or high likelihood of realization.
Where did the savings come from?
The interchange review accounted for more than half the total. Within the network fee review, fee reductions made up three-quarters and merchant pass-through the rest.
| Category | Amount | Share |
|---|---|---|
| Interchange review | $3.34M | 56% |
| Network fee review: fee reductions | $1.93M | 33% |
| Network fee review: merchant pass-through | $0.64M | 11% |
| Total | $5.9M | 100% |
How long did it take, and what data was needed?
The analysis took 4-6 weeks and used the ISO's network invoices and interchange data. No system integration was required.
What does this mean for other ISOs and acquirers?
Interchange is more manageable than it looks. Qualification rates drift as merchants, channels and card mix change, and the cost of that drift adds up quickly at scale.
Reviewing interchange and network fees together gives a fuller picture of what an ISO can control.
Questions and answers
How much can an ISO save on interchange and network fees?
In these two reviews, $5.9M a year, or 10-15 bps of processing volume: $2.6M from network fees and $3.3M from interchange.
What is interchange qualification?
Whether transactions qualify for the lowest interchange rate available to them. Transactions that don't meet a program's requirements are charged at higher rates.
How long does an interchange and network fee review take?
This one took 4-6 weeks using the ISO's network invoices and interchange data.
Annualized figures from a network fee review and a separate interchange review.
Most programs we review are paying network fees they don't need to. A review takes 4-6 weeks and needs only your network invoices and volume reports.
Get a network fee review