Interchange fees, explained without the jargon.

The fee before the fee

When a customer pays with a card, several parties get paid before the money reaches you: the card network (Visa, Mastercard, Discover, Amex) sets a fee called interchange, which goes to the cardholder's issuing bank — the bank that gave the customer the card, not the network itself. Your processor collects interchange on the network's behalf and passes it through; they don't set it and generally can't discount it.

This is the part of your statement that's actually non-negotiable. Interchange rates are published by the card networks and updated on a regular schedule (typically around April and October each year). Every processor pays the same interchange for the same transaction — a $50 dinner paid with the same rewards card costs every processor in the country the identical interchange fee. What varies between processors is the markup they add on top.

Why interchange varies by card, not by processor

Interchange isn't one number — it's a matrix of hundreds of rate tiers that vary by card type (debit vs. credit vs. rewards vs. corporate), how the card was accepted (swiped, tapped, keyed, or online), and your business's MCC code. A basic debit card typically carries the lowest interchange; a premium rewards or corporate card carries meaningfully more, because the issuing bank is funding cardholder rewards out of that fee.

This is also why 'our rate is 1.5%' marketing claims are usually incomplete — that number might describe one specific card type under ideal conditions, not your blended average across your actual card mix. The only way to know your real cost is to look at your effective rate: total fees divided by total volume.

Common questions