Visa and Mastercard Interchange
When businesses accept credit or debit card payments, they pay certain fees behind the scenes. One of the most important – and often misunderstood – is the interchange fee. For merchants who accept Visa or Mastercard, understanding these fees is critical for controlling costs and making informed decisions.
In this article, we explain what Visa and Mastercard interchange fees are, how they work, and how they affect your bottom line.
An interchange fee is a transaction fee charged to the merchant’s bank (acquirer) and paid to the cardholder’s bank (issuer) every time a customer uses a credit or debit card. It compensates the issuer for the risks and costs involved in processing card payments.
These fees are set by the card networks—Visa and Mastercard—but collected by the banks.
Yes, Visa and Mastercard each publish their own interchange fee schedules, and while the structures are similar, the actual rates can vary slightly. Both networks review and update their interchange rates semi-annually, usually in April and October.
Here’s what influences the differences:
Interchange fees are typically a percentage of the transaction amount plus a fixed fee.
Note: These are example rates and vary based on the merchant category, region, and other factors.
Several factors influence the actual rate applied to a transaction:
Interchange fees are the largest component of credit card processing costs. Here's why merchants should care:
While Visa and Mastercard set base interchange rates, merchants can optimize processing practices to qualify for lower tiers:
Both networks update their fee structures regularly. For example:
You can always find the latest interchange tables on their official websites:
Understanding Visa and Mastercard interchange fees is crucial for any merchant accepting card payments. While these fees can’t be avoided, they can be managed by improving transaction methods, reviewing your processing agreements, and keeping an eye on fee updates.
The more informed you are about interchange, the better you can protect your profit margins and build a cost-effective payment strategy.