Credit Card Processing Fees: Interchange Fees Explained


However, all these transactions have a price. The credit card company sets an interchange fee that the merchant or provider must pay each time customers swipe a credit or debit card, whether physically or digitally, over the Internet. These small costs, often called swipe feecan add up to huge budgets for many large and small businesses.

Interchange fees cover the expenses of accepting, processing and approving card transactions. Many factors can affect the amount of the fee, making it difficult to estimate the exact amount of the cost.

We’ve put together this quick guide to explain interchange fees, the variables that influence them, and where you can find interchange fees by card network.

What are interchange fees?

When a customer or business purchases products or services from a merchant or vendor using a credit/debit card, the credit card company charges the merchant selling the product or the service an interchange fee (or rate). Credit card fees are higher than debit card fees, but they are only a small part of the purchase price.

Financial services firms adopt these swipe fees to earn revenue and as a “buffer” or hedge to accept short-term credit risk when a customer borrows money from the financial institution to buy anything. . Other costs, such as credit fraud and chargebacks, are also covered by the fee.

How are interchange fees calculated?

Interchange fees are calculated according to various criteria, but financial institutions base them on, among other things, financial risk statistics and money processing and transfer expenses. These fees are determined by credit card networks such as Visa, MasterCard, American Express and Discover once or twice a year.

Recently, Visa and MasterCard announced the figures for interchange fees. If you check the Visa or MasterCard interchange fees, you will see that the final (one-time) interchange price you pay is made up of many interchange fees.

Every consumer transaction you process through your website incurs a cost from credit card networks such as Visa and MasterCard, payment gateways and processors, card-issuing banks, and your company’s bank account. This is a percentage fee based on the overall transaction amount, and is usually included on your payment processor’s bill as a unique combined number. It becomes difficult for merchants to pay these fees since the amount they have to pay usually varies depending on certain transaction circumstances. Here are the many factors that will influence the amount of the fee:

card type

Interchange fees vary depending on the type of card and the financial institution that issues it. Debit cards offer cheaper fees than credit cards due to a lower risk of fraud. Interchange fees on rewards cards may be higher than on regular cards.

map network

Interchange costs vary by business type and size, such as grocery stores versus gift shops. Interchange fees are also affected by company size. Larger companies, for example, may be able to negotiate cheaper interchange fees with financial institutions than smaller companies.

Transaction Type

How the transaction was concluded is another factor that affects interchange costs. Was it purchased through a cash register, mail order or online?

Card present vs card not present – Card-present (CP) transactions have a reduced risk of fraud compared to card-not-present (CNP) transactions, resulting in lower interchange rates (i.e. online or digital payments) .

National or cross-border payments – This is a domestic transaction if the cardholder’s bank is located in the same country as your business. And it’s usually cheaper than cross-border transactions if the card-issuing bank and your business aren’t located in the same country.

What are the average interchange fees charged by companies?

Interchange fees in Europe are typically around 0.3-0.4% of the overall transaction value. It is 2% in the United States. Card schemes determine interchange fees, which you cannot trade with. Card networks also regularly adjust rates; for example, MasterCard and Visa announce new rates each April and October. Today, the best approach to determine the actual costs is to visit the card scheme website.

Difference between interchange++(plus-plus) and mixed prices

Interchange++ (Interchange Plus Plus) and blended pricing are the most common pricing structures for card transactions. The main distinction between the two is transparency.

Exchange ++(moremore)

You can take a deep dive into the three-card payment processing costs you learned about before using Interchange++. Interchange fees, card scheme fees and acquirer markup fees are all fees you must pay. You are only charged the actual interchange price, which may be cheaper than if it were fixed, as interchange fees vary depending on various circumstances.

Mixed pricing

Using a blended pricing model, you’ll be charged the average processing cost plus a fixed markup fee. The markup charged for each transaction is the same in this situation, and you can’t see how the spend is allocated. It’s easier to understand, but it’s not transparent. There’s no way to tell if lower exchange rates are saving you money.


Interchange fees have become an important financial factor for many businesses, from small businesses to giant corporations, many of which are crying foul. You may be worried that interchange fees will eat into your revenue, but the benefits of accepting additional online payment methods outweigh the expense of interchange fees. In short, you can try things like nudging people to use specific types of cards or making purchases in person. Nevertheless, these minor changes will gradually harm the customer experience and turn off potential and current customers.

You’d better look for alternative methods to reduce costs in your business. Allowing customers to pay with credit or debit cards is key to increasing customer satisfaction, conversions, and brand loyalty, no matter the size of your business or the items you offer.


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