Payments glossary · Fees
Interchange Fee
Interchange is a fee the merchant's acquirer pays to the cardholder's issuing bank on each card transaction. Card schemes set the rates, which vary by card type, region and payment channel, and it is often the largest component of card acceptance costs.
How Interchange Fee works
Merchants do not pay interchange directly: the acquirer pays it and recovers it through the merchant service charge. Rates are published by the card schemes and vary widely. Consumer debit is generally cheaper than consumer credit, commercial and premium cards cost more, and transactions with cards issued in another region usually carry higher rates than domestic ones.
Regulation caps interchange in some markets. In the EU, the Interchange Fee Regulation limits interchange on consumer cards to 0.2% of the transaction value for debit and 0.3% for credit when both the issuer and the acquirer are in the EU, and the UK kept equivalent caps for domestic transactions. Commercial cards are outside these caps. For payments at EEA merchants with consumer cards issued outside the EEA, Visa and Mastercard committed to the European Commission in 2019 to cap interchange at 1.15% for debit and 1.5% for credit online, and 0.2% and 0.3% in store.
Merchants cannot negotiate interchange, but on interchange++ pricing they pay the actual rate for each card rather than an average, and can see how their customers' card mix drives cost. Processing cross-border customers through a local acquirer can also change which interchange rules apply.