Interchange Fee
Interchange Fee — Definition & Guide
An interchange fee is a per-transaction charge set by card networks (Visa, Mastercard, Discover) and paid to the card-issuing bank on every card transaction. It is the largest component of card processing cost and varies by card type, entry method, and merchant category. The Federal Reserve publishes average interchange fee data annually — the actual rates vary significantly depending on whether a transaction uses a debit card, standard credit card, or premium rewards card.
Interchange is the largest component of what you pay to process credit and debit cards. It is not kept by your processor — it flows from your acquiring bank to the customer’s issuing bank as compensation for the issuer’s risk, fraud protection, and card services. Your processor passes it through to you at cost.
On an interchange-plus statement, the interchange fee is listed as a separate line item so you can see exactly what each card type cost. On flat-rate or tiered statements, it’s bundled into the total rate — you pay it either way, but you can’t see it.
This matters because interchange rates vary significantly by card type. A standard Visa debit card might carry 0.05% + $0.21 interchange under Durbin-regulated rates. A Visa Signature rewards card might carry 2.10% + $0.10. Under flat-rate pricing, you pay the same blended rate for both. Under interchange-plus, you pay what each card actually costs — typically producing a lower effective rate for most card mixes.
Here is the flow of a typical interchange fee scenario:
The interchange fee is set by the card network and non-negotiable. Your processor cannot reduce it. What you can control is ensuring your transactions qualify at the best available interchange category for each card type — which requires proper terminal configuration, correct transaction coding, and the right merchant category code.
Debit cards carry the lowest interchange. Standard credit cards are mid-range. Premium rewards and corporate cards carry the highest rates.
Card-present chip or tap transactions qualify at lower rates than keyed or card-not-present transactions. The physical card being present reduces fraud risk and lowers the interchange cost.
Your MCC affects which interchange categories your transactions qualify for. Getting the right MCC at account setup matters.
B2B transactions with Level 2 and Level 3 data can qualify for significantly lower interchange rates on corporate and purchasing cards.
An interchange fee is a per-transaction fee paid to the cardholder’s issuing bank. It is set by card networks like Visa and Mastercard and varies by card type, transaction method, and merchant category.
Visa and Mastercard publish their interchange rate tables twice a year. Rates vary by card type (rewards, debit, commercial), entry method, and merchant category code.
No. Interchange is non-negotiable — your processor cannot change these rates. You can lower your effective interchange cost by optimizing entry methods and ensuring transactions qualify at the best available rate for each card type.
Under interchange-plus pricing, interchange appears as a separate line item for each card type. Under flat-rate or tiered pricing, it’s bundled into the total — you pay it but can’t see it broken out. Learn more about payment processing consumer protections from the CFPB.
Want to See Exactly What Interchange Is Costing You?
Send us your last processing statement. We will break out interchange by card type so you can see what each transaction actually costs — and identify whether your current pricing model is hiding markup in the bundled rate. If you are already on interchange-plus, we will verify your processor is passing through interchange at cost.
Request a Free Statement ReviewNo obligation • No pressure • Response within one business day