Glossary · Finance & Payments

Interchange Fee

An interchange fee is paid by the merchant's acquirer to the cardholder's issuer on each card transaction and is usually the largest part of merchant costs.

Updated October 6, 2026

An interchange fee is an amount paid by the acquirer to the issuer each time a card transaction is completed. It is set by card networks or, in some places, capped by regulators, and it varies by card type, transaction type and region.

Why it matters

Interchange is typically the largest component of what a merchant pays to accept cards, and it helps issuers fund rewards, fraud losses and the cost of providing credit. The acquirer passes the cost on within the merchant's pricing. In "interchange-plus" pricing the merchant sees interchange, the network fee and the processor's markup as separate lines; with flat-rate pricing they are blended into one rate. Regulation differs widely: some jurisdictions cap consumer debit and credit interchange, others leave it largely to market negotiation.

Example

Sale:                100.00
Interchange (e.g. 1.0%):  1.00   -> issuer
Network fee (e.g. 0.1%):  0.10   -> card network
Acquirer markup (e.g. 0.4%): 0.40 -> acquirer / processor
Merchant receives:   98.50

These percentages are only for illustration; real rates depend on card category and local rules.

Common mistakes

  • Treating a processor's headline rate as the interchange rate.
  • Assuming the same rate applies to credit, debit and international cards.
  • Ignoring surcharging or cost-pass-through rules, which vary by country.

Rules vary by country; this entry is a definition only.

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