Interchange Fee

What is Interchange Fee?

An interchange fee is a transaction fee that a merchant’s bank (acquirer) pays to a customer’s bank (issuer) for every card payment. These fees are set by the card networks and are intended to cover the costs of fraud, risk, and processing.

Interchange fees make up the largest portion of the total cost of processing a card transaction. The rates vary based on the card type, the industry, and whether the card was present at the time of sale.

Why It Matters

• Represents the primary cost of accepting credit and debit cards

• Funds the rewards programs and fraud protection offered by banks

• Influences the pricing strategies of merchants and payment processors

• Varies significantly between different card brands and geographic regions