Interchange Fee

By September 17, 2018Industry Terms

Each credit or debit card transaction a merchant processes is accompanied by an interchange fee, which is paid to the issuing bank.

The card associations assign the interchange rate, which can fluctuate based on:

  • the type of transaction processed
  • the type of card used
  • the type of merchant processing the payment
  • the geographical region of the issuer

The interchange rate is usually a flat fee plus a percentage of the total transaction amount. Of all the processing fees paid, the interchange fee is usually the most expensive, sometimes comprising 70-90% of all the costs associated with a transaction.

The interchange fee is not refunded in cases of a merchandise return or a chargeback.

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