Merchant Account Enhanced Billback Explained
What is Enhanced Billback? Enhanced Billback, also known as “Billback,” “Enhanced Recover Reduced,” or “Blended” pricing, is a pricing structure that charges merchants an initial flat rate on each transaction and then bills the remaining downgrade fees at a later date, usually on the next month’s statement. Enhanced billback is often criticized for unnecessarily obscuring the true transaction fees that a merchant pays, enabling sales reps to quote a simple but inaccurate “flat rate” to merchants upon signup.
The details of each enhanced billback plan will vary, but the basic structure will always include a flat rate quote for qualified transactions. In this respect, enhanced billback is similar to tiered pricing, which also lumps all transactions under a single flat rate. In enhanced billback, the merchant initially pays one flat rate—for example, 1.5%—on all transactions processed in a month. At the end of the month, the merchant’s provider will look at all of the merchant’s transactions and determine how many of the swiped cards carried an interchange rate above the merchant’s qualified rate of 1.5%. The provider will then bill the merchant the difference between 1.5% and those cards’ actual interchange rates in the next month’s statement, all at once.
This “all-at-once” method makes it difficult for merchants to determine what they’re effectively paying in transaction rates. Enhanced billback statements usually don’t provide a full breakdown of cards swiped, instead simply listing the transactions processed at the qualified flat rate and lumping the downgrade fees into one large monthly cost. In addition, a merchant will need two months’ worth of statements to calculate his or her effective rate, which can often result in confusion over how fees have been applied. For these reasons, merchants are advised to avoid enhanced billback pricing and seek Interchange-plus.
Enhanced Billback Video Explanation
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