EIRF (Electronic Interchange Reimbursement Fee)

What Is Electronic Interchange Reimbursement Fee (EIRF)?

EIRF, or Electronic Interchange Reimbursement Fee, is a Visa debit interchange category. It’s more expensive than most other categories.

EIRF Explained

Interchange rates are fees that merchants pay for each credit and debit card transaction. Visa, Mastercard, and the other card brands set the amount of these fees.

All merchants pay interchange fees, although they may or may not see individual fees on their statements. Different pricing plans can bundle the fees or show them individually.

Factors that influence the fee amount include the type of transaction, the type of card, and more. For example, a card-not-present transaction is in a different interchange category than a card-present transaction. Business or corporate cards fall under a different category than personal cards.

Sometimes, a transaction should fall under one category, but it doesn’t. The reason could be a situation like a power outage making it impossible to request an electronic authorization. In many cases, the cause is a merchant’s actions.

When a transaction falls under a more expensive category, it’s called a downgrade.

If a merchant waits too long to settle a batch, the transactions in the batch will downgrade. Transactions downgrade if the authorization and settlement amount don’t match (and there isn’t an explanation, such as a tip). For online transactions, failing to use the address verification system (AVS) causes a downgrade.

In some cases, downgraded Visa debit transactions fall under EIRF.

EIRF is one of the more expensive interchange categories. The only category that is more expensive is called Standard. If a transaction doesn’t meet the criteria for EIRF, it downgrades even further to Standard.

Consumer debit and prepaid cards can fall under EIRF. It used to apply to consumer credit cards as well, but Visa eliminated that category in 2020.

If you’re a business owner whose rates are higher than you expect, it might be because your transactions are downgrading. While it’s unlikely that you can prevent all downgrades, there are several ways to help reduce them.

Here are some best practices to avoid EIRF and other expensive interchange categories:

• Request an electronic authorization whenever possible
• Settle transactions on time—typically within 24 hours
• Use AVS (Address Verification Service) for card-not-present transactions
• Authorize and settle for the same amount (or within 20% in tipping environments)

If your pricing model bundles interchange fees, it’s hard to know if your transactions are downgrading. Consider asking your processor for a downgrade report to make sure you’re not paying too much.

EIRF Examples

The following are hypothetical examples based on Visa’s current interchange rates. Visa publishes new rates periodically, so be sure to refer to Visa for up-to-date information.

If you own a retail store, you’re eligible to pay a rate of 0.05% plus $0.21 for Visa debit cards. This rate is for a regulated, card-present retail transaction.

If you do everything “right” when you run the card, you can expect to pay the above interchange fee. For example, the customer inserts their card into your terminal so that it can read the chip. You settle the transaction the same day and for the same amount as your authorization.

Now, imagine that you miss one of those steps. Maybe you accidentally unplug your terminal, and it doesn’t settle that night.

Late or stale settlement is one cause of a downgrade to EIRF rates. If you settle after 24 hours, but within 48 hours, you might end up with an EIRF transaction. In this case, you would pay $1.75% plus $0.25.

As we mentioned above, the Standard debit category is more expensive than EIRF. If you wait over 48 hours to settle that batch, you would probably end up with Standard transactions. In that case, you would pay $1.90% plus $0.25 per transaction.

As you can see, a downgraded transaction is significantly more expensive.