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What are the Interchange Rates?

The interchange rates (or interchange fees) represent the portion of payment settlement cost that is paid to the card issuing banks. These fees are established by the credit card companies. Interchange rates are openly disclosed on both VISA's and MasterCard's websites. No payment acquirer can settle payments for less than actual interchange. It is part of the unavoidable cost of processing card payments. There are literally hundreds of interchange rates and these vary by card type, cardholder rewards, transaction scenario, and merchant type. These links will take you to the published interchange rates:

Interchange fees actually have two cost components, a percentage rate and a fee per transaction. Interchange rates span from about 0.05% to 3.25% and the transaction fees range from zero to approximately $0.22 per transaction. Interchange fees are ultimately charged to the merchant for the privilege of accepting card payments. The examples below represent some of the more prevalent interchange rates:

Common Interchange Fees
Category Rate Transaction Fee
Visa/MasterCard Check/Debit Card 0.05% $0.22
Visa CPS Retail Credit 1.51% $0.10
MasterCard Merit III 1.58% $0.10
Visa Keyed/MOTO/Ecommerce 1.80% $0.10
MC Keyed/MOTO/Ecommerce 1.89% $0.10
Visa Rewards 1.65% to 2.10% $0.10
MasterCard Rewards 1.73% to 2.05% $0.10
Visa Corporate Cards (common) 2.20% to 2.65% $0.10
MC Corporate Cards (common) 2.05% to 2.82% $0.10

The Payment Acquirer's Perspective

All payment acquirers are charged the same interchange fees. Interchange fees are ultimately earned by the card issuing banks.

In addition to interchange fees, the payment acquirer must also pay the following fees for payment settlement. These fees are ultimately earned by the card brand.

The payment acquirer also pays fees to "front end processors" for data handling of the payment transaction details and items like card authorizations and batch headers for final settlement.

All of these payment settlement and processing fees are the wholesale costs that the payment acquirer must bear. Of course, these fees are all passed along to the merchant, along with some measure of profit, for the entire service of settling the payments for the merchant.

The measure of profit for the payment acquirer is achieved by manipulating rates or adding surcharges, markups, or fees.

Other service fees can be added onto the same merchant account for things like payment gateways or out of network card processing like EBT or fleet cards.

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