A fee paid by the merchant's bank to the cardholder's bank on each card transaction, forming a large part of card processing costs.
When a customer pays by card, several parties take a share. The interchange fee goes to the issuing bank that provided the customer's card. Card networks such as Visa and Mastercard set interchange rates, which vary by card type, transaction type, merchant category, and country. Rewards and business cards usually carry higher rates than basic debit cards. Merchants also pay network fees and their payment processor's markup.
For example, a small shop might notice that its processing costs are higher for premium credit cards than for debit cards. Some regions cap interchange by law: the European Union limits consumer card interchange to 0.2 percent for debit and 0.3 percent for credit, and the United States caps debit interchange for large banks. Understanding these fees helps businesses compare processor pricing.
A service that securely captures and transmits payment details from a customer to the banks and networks that approve the transaction.
Payment ProcessorA company that handles the technical and financial steps of card and digital payments between a merchant, card networks, and banks.
What you actually pay to accept cards: interchange, network fees and markup, flat-rate versus interchange-plus pricing, and the state and card network rules on surcharging.