Advertiser Disclosure

💳 Save money on credit card processing with one of our top 5 picks for 2022

The Complete Guide To Understanding Credit Card Interchange Rates & Fees

Interchange fees are the fees merchants pay to accept credit cards from their customers. The details can be confusing, so we've made a guide to help you.

    Frank Kehl
  • UPDATED

Advertiser Disclosure: Our unbiased reviews and content are supported in part by affiliate partnerships, and we adhere to strict guidelines to preserve editorial integrity.
Frank Kehl

Frank Kehl

Expert Analyst & Reviewer at Merchant Maverick
Frank Kehl has been researching and analyzing merchant services, payment gateways, and international money transfer services since 2015. He has a Bachelor of Science degree from Penn State and a Juris Doctorate from the Ventura College of Law.
Frank Kehl
View Frank Kehl's professional experience on LinkedIn.

We've done in-depth research on each and confidently recommend them.

We've done in-depth research on each and confidently recommend them.

Sources

7 Comments

Responses are not provided or commissioned by the vendor or bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by the vendor or bank advertiser. It is not the vendor or bank advertiser's responsibility to ensure all posts and/or questions are answered.

    Tom

    Just to confuse the situation, Visa is now using the terminology “Non Qualified” on interchange rates.

    You should do an article on Payfac pricing. As software devlopers/franchisors are now fully in the payments business using this model. Many business owners are unaware of the pitfalls of locking their credit card activity to a single provider

      This comment refers to an earlier version of this post and may be outdated.

      raffaele

      On average, what is the portion of the Interchange fee that is then paid to the Issuer Bank?
      If Visa makes 1.5%, how much is going to the bank that has “issued” the card with VISA?

        This comment refers to an earlier version of this post and may be outdated.

        Jessica Dinsmore

        Hi Raffaele,

        Visa and other card networks charge a network fee on each transaction, typically around 0.05% (not 1.5%). This is essentially a licensing fee for the use of their logo on the credit card. The issuing bank – which is extending credit to the customer and assuming all of the risks in doing so – gets the interchange fees. This can be confusing because the interchange rates are published by Visa, not the individual banks. As we discuss in the article, roughly 70-90% of the processing costs for any transaction will go to interchange fees, with the bulk of the remaining costs going to your processor as a markup.

          This comment refers to an earlier version of this post and may be outdated.

          Stephanie M Davis

          Although there are many factors that impact interchange (cp, cnp, amount) can you share the calculation of those two averages debit .3 and credit 1.8 so I can understand if we are calculating ours consistently. Also, can you share or lead me to information that would help identify areas of opportunity to improve credit interchange? I understand that the networks have different fees and processors as well, but on the credit side, what factors have a significant impact to the interchange rate?

          Thank you!

            This comment refers to an earlier version of this post and may be outdated.

            Jessica Dinsmore

            Hi Stephanie,

            The 0.3% and 1.8% figures are not calculated averages. They’re merely rough estimates based upon all of the possible interchange rates from each of the major credit card brands. To calculate the average for your business, you would have to look at which specific interchange rates apply to your business. For example, interchange rates for auto fuel sales won’t apply unless you’re running a gas station.
            If you’re on an interchange-plus or membership pricing plan, you can look at the data from your monthly processing statements and figure out what you’re actually paying in interchange fees. Unfortunately, you won’t be able to do this with a tiered or flat-rate pricing plan.
            Also, there isn’t much you can do to lower your interchange costs. Submitting your batches promptly at the end of the day will help to avoid paying a higher rate, but that’s about it.

              This comment refers to an earlier version of this post and may be outdated.

              Eric Olson

              Great post. Interchange-plus is absolutely the way to go. That is why we only allow interchange-plus pricing in the credit card processing comparison shopping engine we built at TransFS.com. Here are two posts we have written about interchange-plus pricing that might be helpful to Merchant Maverick readers:

              What is interchange-plus: http://bit.ly/iXUZE

              Why you should want interchange-plus pricing: http://bit.ly/3emtIZ

              Enjoy!

              Cheers,
              Eric Olson
              Co-founder: TransFS.com

                This comment refers to an earlier version of this post and may be outdated.

                The Merchant Maverick

                Eric thanks for the kind words, and the awesome articles. I can imagine that your services are much needed in this day and age. I still haven’t had a chance to take a look at TransFS in detail…work’s been extremely busy. But, I’ll definitely take some time in the very near future. 🙂

                Have a great weekend!

                  This comment refers to an earlier version of this post and may be outdated.

                Comments are closed.

                Is It Time To Switch Credit Card Processors?

                If your payment processing provider is doing any of these six things, it's probably time to switch. Download our list to learn more.

                • This field is for validation purposes and should be left unchanged.

                The vendors that appear on this list were chosen by subject matter experts on the basis of product quality, wide usage and availability, and positive reputation.

                Merchant Maverick’s ratings are editorial in nature, and are not aggregated from user reviews. Each staff reviewer at Merchant Maverick is a subject matter expert with experience researching, testing, and evaluating small business software and services. The rating of this company or service is based on the author’s expert opinion and analysis of the product, and assessed and seconded by another subject matter expert on staff before publication. Merchant Maverick’s ratings are not influenced by affiliate partnerships.

                Our unbiased reviews and content are supported in part by affiliate partnerships, and we adhere to strict guidelines to preserve editorial integrity. The editorial content on this page is not provided by any of the companies mentioned and has not been reviewed, approved or otherwise endorsed by any of these entities. Opinions expressed here are author’s alone.

                Sign up for the Maverick Newsletter

                • Please select topics of interest

                • We occasionally send out emails with special offers.
                • This field is for validation purposes and should be left unchanged.