The term EIRF and/or Standard EIRF (SEIRF) is used by Visa and Mastercard to describe their “Electronic Interchange Reimbursement Fee” program. Sadly, this is not a program that will be reimbursing you, the merchant account owner, anytime soon. This is in fact, a fee that will be reimbursed to the bank that processes your credit/debit card transactions. You, the merchant will receive no reimbursement. In addition, the majority of the time, your transaction is being pushed into a higher cost category which in turn, will cost you more money.
An EIRF or Standard EIRF (SEIRF) fee is applied when Visa or Mastercard feels that a transaction that was processed by you, did not meet all of the requirements necessary to process at the best rate possible. This fee can apply to both a Visa or Mastercard credit or debit card. Furthermore, these fees can be charged for both card present transactions and card not present transactions.
Why Kind of Downgrade Fees Does Visa or Mastercard Charge?
The downgrade fees can really depend on your merchant account transactions fees. For example, if your transaction fees for debit cards are 1.75% + $0.20 per transaction. The additional downgrade fee of 15 Basis Points and 0.05 cents will increase this transaction to 1.90% + $0.25 per transaction.* Please contact your favorite sales rep at SecureGlobalPay to assist in educating you on how to avoid these additional fees.
An occasional SEIRF or EIRF fee would not be costly or even noticeable. However, if you were to apply that fee to a number of days or months’ worth of transactions, you could see how these fees would quickly add up and make a huge impact on your bottom line.
How Do I Avoid the EIRF or SEIRF Rate?
There are actually a number of reasons that a downgrade rate would apply that you, as the merchant account owner, need to be aware of when processing credit or debit cards.
One of the most common reasons for an EIRF or SEIRF downgrade rate is due in part to a transaction batch not being settled within 48 hours. This is especially common with our merchant account owners who manually settle their batches through their POS system. When the credit or debit card is swiped through the POS system, your merchant account provider will send you an authorization for payment. At night, if you have chosen to manually settle the batch, you must take all of the credit and debit card transactions authorized for that day and “settle” the entire batch of transactions. This isn’t difficult and that is why many of our merchants choose to do it this way.
However, if for some reason you are unable to settle the batch with 48 hours, then you will be charged the higher EIRF or SEIRF rate for that entire batch of transactions. This is why we highly recommend that you make sure your transaction batches are automatically settled each night. It takes the burden of responsibility off of you to remember to process transactions consistently each day. This will give you peace of mind and will ensure that you receive the lowest discount rate and transaction fee possible.
Another way to avoid costly EIRF or SEIRF fees is to make sure that the original sale price matches the price that was authorized by the merchant account provider. For example, let’s say a customer wants to make a purchase for $25. You ring them up and receive an authorization code for that $25. At the last minute you decide to discount the customer $5 off their entire purchase. It may be tempting to use that same authorization code. After all, if they were authorized for $25, then surely they have enough money for even less! However, if you do not get a new authorization code for that $20, you will be charged the EIRF or SEIRF rate because the authorization code does not match the $25 you originally requested the amount for.
Perhaps the biggest reason for the fee downgrade is due in part to the inability to get a match on a customer’s address. Any “card-not-present” situation requires that you go through the address verification process. The address given must match the address on file for the debit or credit card being used to make a purchase. Make sure that all of your “card-not-present” software requires that you verify the address through the Address Verification System before processing.
One more simple reason that you are being charged EIRF or SEIRF fees could be the magnetic strip on the back of the credit or debit card is not sending completed information to the merchant account provider. Sometimes the integrity of the magnetic strip starts to fade as the card ages. If the magnetic strip looks faded or worn, it is best to just key in the information to avoid the potential fees.
Another related problem could be the terminal you are using to swipe the card is not sending completed information due to damage or old age. If that is the case, please contact SecureGlobalPay right away to upgrade or receive a new terminal!
How do I know If I Being Charged These Fees?
Whether you are a long term customer, or not a customer at all, just give us a call! We would be happy to analyze your statement to find any possible fees.
Each month you may find one or two transactions with an EIRF or SEIRF fee attached. This is almost unavoidable. What you should really look for is if a large percentage of your transaction’s are tagged with fees. This definitely indicates a problem with your processing that you will want to fix immediately.
For merchants who are billed using the Interchange Plus pricing model, fees can typically be found in the section titled “Pending Interchange Charges”. Under the title you will see a line that says “Product Description.” Look for something along the lines of “Visa Non-Debit” or “Mastercard Non-Debit”. Follow the line item to find the “Number of Transactions” and the “% of Transactions” as well as the “Interchange Rate.” If you notice an interchange rate that is higher than usual, compare the interchange rate with the “Number of Transactions” and the “% of Transactions”. You will be able to see how many transactions were charged using the EIRF fee.
For merchants on a tiered pricing approach, these fees can be found in the “Non Qualifying” tier.
What Should I do If I’m Being Charged a Higher Rate?
Once you have noticed there is a problem with your fees, then you will want to contact SecureGlobalPay immediately. We can request a report that will summarize in detail the reason that you are receiving the downgrade fees. This report will help us narrow down the problem so that we can help you make the necessary changes to avoid these fees.
If you are not a customer of SecureGlobalPay, we still recommend that you call us. We have so many years of experience in the business we feel confident that we could help you fix the problem and most likely lower your overall rate as well.
Where Can I Learn More?
For a list of current MasterCard interchange rates, please see: