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Posts
Understanding Interchange Fees
Every time a card payment happens, a small fee quietly changes hands; this is the interchange fee. It’s the cost the merchant’s bank (the acquirer) pays to the customer’s bank (the issuer) for processing the transaction. Interchange exists to balance risk, cover fraud protection, and reward the infrastructure that makes instant, global payments possible.
1. Who pays what?
When you buy something with a card, the merchant pays a total “merchant service fee” to their acquirer. A portion of that fee, the interchange, goes to the issuer. The rest covers scheme and processing costs.
2. Why does it exist?
Issuers take on responsibility for verifying transactions, preventing fraud, and ensuring the customer gets protection (like chargebacks). Interchange compensates them for those services and risks.
3. What affects it?
Rates vary by card type (debit, credit, commercial), region, merchant category, and whether the payment was made in-person or online. Regulators in some markets, like the UK and EU, cap interchange to keep fees fair and transparent.
At Monavate, we bring clarity to interchange. Our platform provides full visibility into cost structures, ensuring partners understand where value sits in every transaction and how to optimize their programmes for performance and profitability.