Interchange Fees and Rates

Understanding Interchange Rates and Fees

Interchange fees make up the bulk of the credit card processing fees you’ll pay when you accept credit card and debit card payments.

That’s why it pays to understand interchange fees, both as a means for understanding your overall processing costs and as a tool for analyzing and evaluating your monthly credit card processing statement.

Below, you’ll find a brief explanation of what interchange fees are and how they work, along with tables listing out the most common interchange rates for Visa, MasterCard, and Discover.

For a discussion of other types of fees to expect when you accept credit card payments (including interchange fees, card network assessments, and payment processor markups), visit our general guide on Credit Card Processing Fees.

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What are Interchange Fees?

Interchange fees are credit card processing fees that apply to every credit card and debit card transaction. Interchange rates for each card transaction are set by the card networks (Visa, MasterCard, etc.), and the resulting interchange fees are collected by the card networks and paid to the banks that issued your customers’ cards.

Interchange fees are part of your payment processor’s wholesale costs for processing card transactions, in other words, so no payment processor can offer lower interchange rates or otherwise change them. At most, your payment processor can determine how it will pass interchange costs on to its customers, whether directly (as through pass-through interchange-plus pricing plans) or indirectly through tiered or flat-rate credit card pricing models.

But, in any case, your overall processing costs will reflect the impact of the interchange fees charged by the credit card networks for each transaction.

How Interchange Fees Work

Typically, interchange rates take the form of a percentage applied to sales volume plus a dollar-amount per transaction—for example, 1.51% + $0.10 (this is Visa’s CPS Retail interchange rate).

If you received 15 credit card payments for a total of $1,000.00 at this rate, you would pay $16.60 in interchange fees:

1.51%($1,000) + 15($0.10) = $16.60 (or 1.67% of your total sales).

That’s $15.10 + $1.50 = $16.60 with an average ticket of $66.67.

Note that this combined total will differ depending on the number of transactions processed at this rate. $1000 in sales spread out over 50 transactions would generate a $20.01 interchange fee instead:

1.51%($1,000) + 50($0.10) = $20.01 (or 2% of your total sales).

That’s $15.10 + $5.00 = $20.01 with an average ticket of $50.00.

Will you see these calculations on your monthly processing statement? That depends. Many payment processors (not all) that offer interchange-plus pricing plans will include line items showing each type of card transaction, the interchange rate for that transaction, and a total cost that distinguishes interchange fees from the markup your payment processor has added on.

What factors influence interchange rates?

The different card brands set their own interchange rates (that’s one major factor), so you’ll pay different rates depending on the types of credit and debit cards you accept.

Beyond that, interchange rates break down into various rate-categories set by the card brands. These categories typically depend on:

• Your business type (retail businesses and charities, for instance, might have different rates);
• The card type (debit vs. credit cards, rewards cards, corporate cards, etc.); and
• The transaction type (swiped/chipped, keyed-in, or online transactions).

In general, debit card transactions tend to have lower interchange rates than credit cards, rewards credit cards and business cards have higher rates than ordinary credit cards, and card-present transactions have lower rates than card-not-present transactions (including manually keyed-in transactions).

Visa Interchange Fees and Rates

The table below illustrates some common Visa interchange fees, including retail debit, credit, and rewards credit cards for swiped/chipped and manually keyed-in transactions. Other factors—such as your type of business—can influence and change these rates as well.

For the debit card listings, the term “regulated” refers to debit cards issued by banks with $10 billion or more in assets, which have a lower interchange rate generally than debit cards issued by smaller non-regulated or “exempt” banks.

You can find a complete list of Visa’s interchange fees here.

Common Visa Interchange Rates

MasterCard Interchange Fees and Rates

MasterCard’s interchange rates resemble Visa’s, and both companies offer a similar range of debit cards, credit cards, and rewards credit cards.

As with Visa above, rates will general increase for rewards cards versus basic consumer cards, and regulated debit cards have lower interchange rates than debit cards issued by non-regulated banks.

You can find a complete list of MasterCard’s current interchange fees here.

Common MasterCard Interchange Rates

Discover Interchange Fees and Rates

Like Visa and MasterCard, Discover charges interchange fees on each debit card and credit card transaction. The only real difference is that Discover issues most of its cards itself through Discover bank, so the interchange fees go to Discover instead of a third-party.

Unfortunately, Discover doesn’t publish its interchange rates, but with a little detective work, it’s possible to piece together many of Discover’s most common interchange fees.

Common Discover Interchange Rates

Discover Interchange Rates for Recurring Payments

Discover sets slightly different rates for recurring payments. All recurring payments are technically card-not-present transactions, so these are essentially lower card-not-present rates for businesses that use recurring payment methods.

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