UNDERSTANDING MERCHANT PRICING

UNDERSTANDING MERCHANT PRICING 0

CONTENTS Definitions.. 1 Pricing Structures. 2 Tiered Pricing 3 Flat Rate Pricing 4 Cost Plus Pricing...5 Additional Resources 6 Visa Interchange Fees Table 7 MasterCard Interchange Fees Table..12 1

DEFINITIONS Authorization Fee Each time a terminal completes a transaction (sale, refund or void), a fee is charged for the communication to the processor's host. Batch Deposit Fee Each time a merchant closes their terminal batch (settles their terminal), a fee is charged for the communication of the batch details (transaction counts and volumes) to the processor's host. Card Brand Dues and Assessments Card Brand Association Fees are charged by Visa and MasterCard directly to Merchants through the Acquiring Bank. All businesses accepting credit cards must pay these fees. Card Association Fees go directly to the Card Brands and fund Visa and MasterCard services and operations, including licensing, patents and copyrights, operating regulations, national and international settlement and authorization systems, the interchange network, product development, advertising and promotion, and risk management services. Effective Merchant Discount Rate The EMDR is calculated as the total transaction fees divided by the total sales volume. Total transaction fees include the total of any bank card merchant discount rate, non-qualified fees, card brand fees, international card brand fees, transaction fees and refund fees. International Cross-Border Fees Visa and MasterCard charge a cross-border fee if your customer is outside of Canada to help manage currency exchanges. This fee varies depending on your processing currency. The Visa International Acquirer Service Fee for Multi-Currency POS is 0.40% and for Single Currency POS is 0.80%. The MasterCard Cross Border Assessment Fee for Foreign Card Voume is 0.80%. Interchange Each credit card payment qualifies at a certain Interchange rate; Interchange refers to a matrix of discount rates and transaction fees defined by the Card Associations (e.g. Visa and MasterCard). These fees are paid by the payment processor to the cardholder's bank to compensate for accepting credit card payments. Factors that influence Interchange fees include type of card presented, business type and how the transaction is performed. As Interchange Fees are updated directly by Visa and MasterCard, please refer to the following sources to access the most recent rate tables: Visa: http://www.visa.ca/en/aboutcan/mediacentre/interchange/index.jsp MasterCard: http://www.mastercard.com/ca/merchant/en/getstarted/interchange_rates.html 1

PRICING STRUCTURES We provide three types of pricing structures: Tiered Pricing Interchange fees assessed by the card Associations are grouped in 2 different categories: or Non-. Depending on how a payment is processed and the type of credit card used, transactions may downgrade to as the associated Interchange categories carry a higher cost. Some common factors that may prompt a transaction to downgrade include transactions that are keyed into a terminal, e- commerce transactions and the acceptance of corporate or reward program credit cards. Card brand assessments are included in the discount rate. Card brand dues are billed and reported separately. Flat Rate Pricing Flat rate pricing consists of a single, consolidated discount rate based on an analysis of your processing history and the industry being serviced. This rate is not affected by Interchange qualification and remains constant regardless of how the transaction is performed or the card type accepted. Card brand assessments are included in the flat rate. Card brand dues are billed and reported separately. Cost Plus Pricing Interchange fees assessed by the card Associations are passed through with no markup, which only cover the processor s cost. In addition to Interchange fees, the processor assesses a fixed rate above its cost to cover service and business infrastructure. Card brand dues and assessments are reported and billed separately from the processor fee. We are dedicated to providing the highest levels of client satisfaction. If you feel your business would benefit from an alternate pricing structure or to further discuss the terms of your merchant agreement, please contact our Client Care Department at 1 877-785-1396. We are available 24/7 to discuss solutions that best fit your business needs. 2

TIERED PRICING EXAMPLE A In this example, a Visa Chip Consumer Credit Card was used for payment, classified as a Transaction (please refer to Visa Interchange Fees Table). A rate: 1.570% (includes Visa Assessment of 0.08%) rate: N/A TOTAL: 1.570% plus applicable dues EXAMPLE B In this example, a Visa Chip Business Credit Card was used for payment, classified as a Transaction (please refer to Visa Interchange Fees Table). A B C rate: 1.570% (includes Visa Assessment of 0.08%) rate: surcharge of 0.430% TOTAL: 2.00% plus applicable dues For both of the examples above, the following dues are assessed by Visa whenever applicable: 0.40% Visa International Acquirer Service Fee (Multi-Currency POS) 0.80% Visa International Acquirer Service Fee (Single Currency POS) C A B 3

FLAT RATE PRICING EXAMPLE In this example, a Visa Chip Business Credit Card with an Interchange Fee of 1.75% was used for payment, classified as a Transaction (please refer to Visa Interchange Fees Table). Neither a Non- Transaction surcharge nor Interchange Fees apply due to the flat rate pricing structure. A Flat rate of 2.23% (includes Visa Assessment of 0.08%) TOTAL: 2.23% plus applicable dues In the example above, the following dues are assessed by Visa whenever applicable: 0.40% Visa International Acquirer Service Fee (Multi-Currency POS) 0.80% Visa International Acquirer Service Fee (Single Currency POS) A 4

COST PLUS PRICING EXAMPLE: In this example, a Visa Business -Recurring Credit Card with an Interchange Fee of 1.85% was used for payment (please refer to Visa Interchange Fees Table). A B C Processor Fee: 0.060% Visa Assessment: 0.08% Interchange Fee: 1.85% TOTAL: 1.99% plus applicable dues In the example above, the following dues are assessed by Visa whenever applicable: 0.40% Visa International Acquirer Service Fee (Multi-Currency POS) 0.80% Visa International Acquirer Service Fee (Single Currency POS) A B C 5

ADDITIONAL RESOURCES MasterCard Canada - Understanding Interchange: http://www.mastercard.com/ca/merchant/en/getstarted/interchange_rates.html Visa Canada Interchange: http://www.visa.ca/en/aboutcan/mediacentre/interchange/index.jsp 6

VISA INTERCHANGE FEES TABLE Visa Interchange Category Debit Industry 1 - NNSS Debit Industry 1 - Intl Settle Debit Industry 2 - NNSS Debit Industry 2 - Intl Settle Chip Debit Industry1 - NNSS Chip Debit Industry1 - Intl Settle Chip Debit Industry2 - NNSS Chip Debit Industry2 - Intl Settle Debit Performance Tier 1 - Intl Settle Debit Performance Tier 1 - NNSS Debit Performance Tier 2 - Intl Settle Debit Performance Tier 2 - NNSS Chip Debit Performance Tier 1 - NNSS Chip Debit Performance Tier 1 - Intl Set Chip Debit Performance Tier 2 - NNSS Chip Debit Performance Tier 2 - Intl Set Electronic Electronic Debit - NNSS Electronic Electronic Debit - Intl Settle Chip Electronic Debit - NNSS Chip Electronic Debit - Intl Settle Debit - Emerging Segment - NNSS Debit - Emerging Segment - Intl Settle Debit - Recurring Payment - NNSS Debit - Recurring Payment - Int\l Settle Consumer Credit - Emerging Segment - NNS Consumer Credit - Emerging Segment - Int Electronic\ Pre PS-2000 INTL PRE-PS2000 Interregional Interlink Standard Visa Intl Electronic Electron Card Chip Full Data Chip Full Data Visa Electron Airline Chip Full Data Airline Chip Full Data Visa Electron Chip Full Data with PIN Chip Full Data with PIN Visa Electron Airline Chip Full Data with PIN Airline Chip Full Data with PIN Visa Electron Chip Consumer Credit Industry1 - NNSS Chip Consumer Credit Industry1 - Intl Se Chip Debit Card - NNSS Chip Prepaid Card - NNSS Chip Debit Card - intl Settle Chip Prepaid Card - Intl Settle Chip Electronic Prepaid - NNSS Chip Electronic Prepaid - Intl Settle Chip Prepaid Industry1 - NNSS Chip Prepaid Industry1 - Intl Settle Tiered Pricing Qualification 7

Chip Prepaid Industry2 - NNSS Chip Prepaid Industry2 - Intl Settle Chip Prepaid Performance Tier 1 - NNSS Chip Prepaid Performance Tier 1 - Intl S Chip Prepaid Performance Tier 2 - NNSS Chip Prepaid Performance Tier 2 - Intl S Standard Debit Card - NNSS Standard Debit Card - Intl Settle Infinite Credit - Emerging Segment - NNS Infinite Credit - Emerging Segment - Int Con Credit Industry 1 - NNSS Con Credit Industry 1 - Intl Settle Prepaid - Recurring Payment - NNSS Prepaid - Recurring Payment - Int\l Sett Electronic Electronic Prepaid - NNSS Electronic Electronic Prepaid - Intl Settl Prepaid Industry 1 - NNSS Prepaid Industry 1 - Intl Settle Prepaid Industry 2 - NNSS Prepaid Industry 2 - Intl Settle Prepaid Performance Tier 1 - Intl Settle Prepaid Performance Tier 1 - NNSS Prepaid Performance Tier 2 - Intl Settle Prepaid Performance Tier 2 - NNSS Standard Prepaid Card - NNSS Standard Prepaid Card - Intl Settle Chip Consumer Credit Industry2 - NNSS Chip Consumer Credit Industry2 - Intl Se Chip Con Credit Performance Tier 1 - NN Chip Con Credit Performance Tier 1 - In Chip Infinite Credit Industry1 - NNSS Chip Infinite Credit Industry1 - Intl Se Chip Con Credit Performance Tier 2 - NN Chip Con Credit Performance Tier 2 - In Con Credit Industry 2 - NNSS Con Credit Industry 2 - Intl Settle Consumer Credit - Recurring Payment NNSS Consumer Credit - Recurring -Intl Settle Con Credit Performance Tier 1 - Intl Se Con Credit Performance Tier 1 - NNSS Infinite Credit Industry 1 - NNSS Infinite Credit Industry 1 - Intl Settle Visa Intl ECom Visa Intl Secure ECom Visa Intl Standard Electron Card Visa Intl Chip Electronic Cons Credit - NNSS Chip Electronic Cons Credit - Intl Settl Cons Credit Performance Tier 2 - Intl Se Con Credit Performance Tier 2 - Intl Se Con Credit Performance Tier 2 - NNSS Chip Infinite Credit Industry2 - NNSS Chip Infinite Credit Industry2 - Intl Se Chip Infinite Credit Performance Tier 1 8

Chip Infinite Credit Performance Tier 1 Electronic Electronic Cons Credit - NNSS Electronic Electronic Cons Credit - Intl S Chip Consumer Card - NNSS Chip Consumer Card - Intl Settle Chip Infinite Credit Performance Tier 2 Chip Infinite Credit Performance Tier 2 Infinite Credit Industry 2 - NNSS Infinite Credit Industry 2 - Intl Settle Visa Intl Standard Visa Intl Infinite - Recurring Payment - NNSS Infinite - Recurring Payment - Intl Sett Cons Credit Performance Tier 2 - NNSS Chip Electronic Infinite Credit - NNSS Chip Electronic Infinite Credit - Intl S Infinite Credit Performance Tier 2 - Int Infinite Credit Performance Tier 2 - NNS Standard Consumer Card - NNSS Standard Consumer Card - Intl Settle Standard Consumer Card - Intl Settle Chip Business Credit Industry1 - NNSS Chip Business Credit Industry1 - Intl Se Chip Corp Credit Industry1 - NNSS Chip Corp Credit Industry1 - Intl Settle Chip Purch Credit Industry1 - NNSS Chip Purch Credit Industry1 - Intl Settl Chip Bus Credit Performance Tier 1 - NN Chip Bus Credit Performance Tier 1 - In Chip Corp Credit Performance Tier 1 - N Chip Corp Credit Performance Tier 1 - I Chip Pur Credit Performance Tier 1 - NN Chip Pur Credit Performance Tier 1 - In Electronic Electronic Infinite Credit - NN Electronic Electronic Infinite Credit - In Chip Infinite Credit - NNSS Chip Infinite Credit - Intl Settle Chip Business Credit Industry2 - NNSS Chip Business Credit Industry2 - Intl Se Chip Corp Credit Industry2 - NNSS Chip Corp Credit Industry2 - Intl Settle Chip Purch Credit Industry2 - Intl Settl Chip Bus Credit Performance Tier 2 - NN Chip Bus Credit Performance Tier 2 - In Chip Corp Credit Performance Tier 2 - N Chip Corp Credit Performance Tier 2 - I Chip Pur Credit Performance Tier 2 - NN Chip Pur Credit Performance Tier 2 - In Signature Card Interregional Premium Card Chip Electronic Bus Credit - NNSS Chip Electronic Bus Credit - Intl Settle Chip Electronic Corp Credit - NNSS Chip Electronic Corp Credit - Intl Settl 9

Chip Electronic Purch Credit - NNSS Chip Electronic Purch Credit - Intl Sett Business Credit - Emerging Segment - NNS Corporate Credit - Emerging Segment - NN Purchasing Credit - Emerging Segment - N Business Credit - Emerging Segment - Int Corporate Credit - Emerging Segment - In Purchasing Credit - Emerging Segment - I Bus Credit Industry 1 - NNSS Bus Credit Industry 1 - Intl Settle Bus Credit Industry 1 - Intl Settle Corp Credit Industry 1 - NNSS Corp Credit Industry 1 - Intl Settle Pur Credit Industry 1 - NNSS Pur Credit Industry 1 - Intl Settle Bus Credit Performance Tier 1 - Intl Set Bus Credit Performance Tier 1 - NNSS Corp Credit Performance Tier 1 - Intl Se Corp Credit Performance Tier 1 - NNSS Pur Credit Performance Tier 1 - Intl Set Pur Credit Performance Tier 1 - NNSS Business - Recurring Payment - NNSS Bus - Recurring Payment - Intl Settle Corp - Recurring Payment - NNSS Corp - Recurring Payment - Int\l Settle Purch - Recurring Payment - NNSS Purch - Recurring Payment - Int\l Settle Standard Infinite Credit - NNSS Standard Infinite Credit - Intl Settle Standard Infinite Credit - Intl Settle NSR Infinite Credit - NNSS NSR Infinite Credit - Intl Settle Bus Credit Industry 2 - NNSS Bus Credit Industry 2 - Intl Settle Corp Credit Industry 2 - NNSS Corp Credit Industry 2 - Intl Settle Pur Credit Industry 2 - NNSS Pur Credit Industry 2 - Intl Settle Bus Credit Performance Tier 2 - Intl Set Bus Credit Performance Tier 2 - NNSS Corp Credit Performance Tier 2 - Intl Se Corp Credit Performance Tier 2 - NNSS Pur Credit Performance Tier 2 - Intl Set Pur Credit Performance Tier 2 - NNSS Chip Business Card - NNSS Chip Business Card - Intl Settle Chip Corporate Card - NNSS Chip Corporate Card - Intl Settle Chip Purchasing Card - NNSS Chip Purchasing Card - Intl Settle Electronic Electronic Bus Credit - NNSS Electronic Electronic Bus Credit - Intl Se Electronic Electronic Corp Credit - NNSS Electronic Electronic Corp Credit - Intl S 10

Electronic Electronic Purch Credit - NNSS Electronic Electronic Purch Credit - Intl Visa Intl Infinite Interregional Signature Preferred Super Premium Card Visa Intl Business Card Visa Intl Corp Card Visa Intl Purchasing Card Standard Business Card - NNSS Standard Business Card - Intl Settle Standard Corporate Card - NNSS Standard Corporate Card - Intl Settle Standard Purchasing Card - NNSS Standard Purchasing Card - Intl Settle 11

MASTERCARD INTERCHANGE FEES TABLE MasterCard Interchange Category Debit Supermarket Base Debit Supermarket Tier 1 Debit Supermarket Tier 2 Debit Big Box Stores Base Debit Big Box Stores Tier 1 Debit Big Box Stores Tier 2 Debit Petroleum Base Debit Petroleum Tier 1 Debit Petroleum Tier 2 Debit Speciality Clothing Stores Base Debit Speciality Clothing Stores Tier Debit Speciality Clothing Stores Tier 2 Debit Other Electronic Base Debit Other Electronic Tier 1 Interregional Consumer Private Label Debit Other Electronic Tier 2 Commercial Rebate MoneySend Payment Interregional Consumer Payment Transacti Interregional Payment Transaction Interregional Transactions at EMV Chip P Interregional Magnetic Stripe Transactio Interregional Magnetic Stripe Transactio Interregional E-commerce Transaction Interregional Commercial Purchasing Larg Debit Standard SecureCode-Enabled International Electronic Interchange (IEI) Intracountry Consumer Supermarket High V International Electronic Interchange (IE Canada Intracountry Consumer Petroleum Intracountry Consumer Rate A Intracountry Consumer Petro High Volume Merchant UCAF Intracountry Consumer Rate B International Full UCAF Intracountry Consumer Supermarket High V Canada Intracountry Consumer PayPass Intracountry Consumer Electronic Intracountry Consumer Supermarket Intracountry Consumer Petro Intracountry Consumer Recurring Payments Intracountry Consumer Rate A High Spend Interregional Consumer Standard International Standard Interchange (ISI) International Standard Interchange (ISI) Intracountry Consumer Rate B High Spend Canada Intracountry Consumer Standard International Corporate Purchasing Data Tiered Pricing Qualification 12

Debit Standard and Non-SecureCode-Enable Intracountry Consumer Standard Intracountry Consumer Secure Enabled Interregional MasterCard Electronic Card Interregional Commercial Premium Standar Interregional Consumer Premium Electroni Interregional Consumer Premium Full UCAF Interregional Consumer Premium Merchant Interregional Consumer Premium Standard Intracountry Commercial Programs Interregional Commercial Standard Interregional Commercial Purchasing Stan Intracountry Consumer Rate A Premium Hig Intracountry Consumer Rate B Premium Hig Intracountry Consumer PayPass High Spend Intracountry Consumer Electronic Intracountry Consumer Supermarket High S Intracountry Consumer Petro High Spend Intracountry Consumer Recurring Payments Intracountry Consumer Supermarket High V Intracountry Consumer Petro High Vol Hig Intracountry Consumer Standard High Spen Intracountry Consumer Secure Enabled Hig Consumer Premium High Spend PayPass Intracountry Consumer Electronic High Sp Intracountry Consumer Supermarket High S Intracountry Consumer Petro High Spend Intracountry Consumer Recurring Payments Intracountry Consumer Standard High Spen Intracountry Consumer Secure Enabled Pre PPD-UMP-EN-300114 13