Interchange is the fee paid on every card transaction by the merchant’s acquirer to the cardholder’s issuing bank, at rates set by the card networks. It varies by card type, transaction channel and merchant category, and it forms the largest component of most merchants’ processing costs, with the acquirer’s margin and network fees layered on top.
Why it matters
Interchange is the part of your rate nobody you negotiate with controls, which makes it the honest baseline for judging any pricing offer. High risk merchants face it at its worst: card not present rates, premium card mixes and merchant category code assignments that qualify for few discounts. The practical levers are structural rather than negotiated, passing full data where programs reward it, keeping authorization quality high and making sure your MCC is right. When a processor quotes a rate that looks below interchange, the difference is being recovered somewhere else in the contract.