Optimal Clearing

Most organizations don’t understand their true cost of accepting credit cards. Often times they know the base price, but their effective rate is substantially higher. At Velocity, our core competency is to facilitate the optimal mapping of transactions to ensure low effective rates.

True Cost

The architecture for classifying credit cards is very complex, with hundreds of categories, subcategories, and rule sets. The true cost for accepting a series of credit cards is tied more to clearing than to price. The theory of optimal clearing focuses on driving more transactions into lower priced buckets.

Transaction Mapping

Each transaction that is processed is mapped to a special category defined by the card associations. This allocation is based on complex rules that are not generally available to the public. Most acquirers conceal this information because it creates additional downgrades and surcharges, resulting in increased profits.

Data Requirements

When a transaction is processed, there is a large amount of data that is transmitted, above and beyond the card number, expiration date, and dollar amount. A sophisticated algorithm inspects this data set and determines where to map the transaction. If the transaction is missing one or more required pieces of data, the algorithm reclassifies the transaction into a higher priced category.

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