Interchange Fees
Transaction fees paid by the merchant's acquiring bank to the cardholder's issuing bank, set by card networks and varying based on card type, transaction method, and merchant category.
Interchange fees represent the largest component of credit card processing costs, typically accounting for 70-90% of total merchant fees. These fees are set by card networks (Visa, Mastercard, Discover, American Express) rather than by individual processors, and are standardized rates that apply across the industry.
Card networks publish interchange rate schedules twice annually (April and October). Rates vary based on multiple factors including card type (debit, credit, rewards, business, premium), transaction method (card-present vs. card-not-present), merchant category code, and the level of transaction data provided. Over 300 different interchange categories exist, with rates ranging from approximately 0.05% + $0.21 for regulated debit cards to 3.5% + $0.10 for premium rewards cards.
Merchants can qualify for lower interchange rates by capturing complete transaction data (including AVS and CVV verification), submitting Level 2 or Level 3 data for B2B transactions, processing with EMV chip technology for card-present transactions, and batching transactions within 24 hours of authorization.
Related Content
Optimize Your Payment Processing
Let Verisave analyze your merchant statement to identify hidden fees and misconfigurations related to interchange fees.
Get a Free AuditRelated Terms
3D Secure
An authentication protocol for online card transactions that adds an additional verification layer between the cardholder and issuing bank, shifting fraud liability from merchants to card issuers when properly implemented.
ACH Payment
Automated Clearing House payment is an electronic bank-to-bank payment method that transfers funds directly between bank accounts through the ACH network, typically used for direct deposits, bill payments, and recurring transactions.
Acquirer
A financial institution that processes credit card payments on behalf of merchants, maintains merchant accounts, and facilitates the settlement of funds from card-issuing banks to merchant bank accounts.
Address Verification Service (AVS)
A fraud prevention tool that compares the numeric portions of a billing address provided during a transaction against the address registered with the card-issuing bank, returning match result codes to help merchants assess transaction risk.
Aggregator
A payment service provider that enables multiple merchants to process card transactions under a single master merchant account rather than each merchant having their own dedicated merchant account, common with services like Square, Stripe, and PayPal.