Interchange is the wholesale fee built into every card transaction, set by the card networks (Visa, Mastercard, Discover, American Express) and paid to the bank that issued the customer's card. It is non-negotiable, the same for every business in a given category, and it sits underneath whatever pricing model you choose.
How it works
When a customer pays with a card, a portion of the sale is routed to their issuing bank as interchange. The networks publish these rates in public schedules and update them, typically twice a year. No one in the chain, not your sales agent, your processor, or your bank, can discount them. They are the wholesale cost of moving the payment.
The rate is not a single number. It varies by:
| Factor | Why it changes the rate |
|---|---|
| Card type | Rewards, corporate, and premium cards usually carry higher interchange than basic debit. |
| How the card is run | Card-present (dipped or tapped) generally qualifies for lower rates than keyed-in or card-not-present. |
| Merchant category | Networks set different schedules for different business types. |
| Data passed | Sending complete transaction data can qualify a sale for a lower tier. |
Because of this, two sales of the same dollar amount can carry different interchange depending on the card and how it was accepted.
Why it matters to you
Interchange is the floor under every pricing model, so it is worth understanding regardless of how you are billed. Whether you are on interchange-plus, tiered, flat, surcharge, dual pricing, or interchange optimization, that wholesale cost is still in there. What changes between models is how the cost is presented and what is added on top, not the underlying interchange itself.
Knowing this helps you read a statement clearly: the markup is the part anyone can compete on, and interchange is the part no one controls. When you compare offers, separate the two. A lower headline rate that hides higher markup is not the same as a genuinely lower cost. Seeing interchange plainly, with the markup stated next to it, is the difference between a price you can verify and a price you have to trust on faith.
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