Interchange fees are a standard feature of accepting card payments, yet many businesses find them confusing. These charges, paid by merchants to the cardholder's bank through a processor or acquiring partner, fund the systems and protections that make digital payments possible. Still, they add up fast – and for some, they quietly chip away at profit.
If your business relies on card payments – especially across markets or at scale – understanding these fees isn't optional. It's the foundation for smarter cost control and a more informed approach to payments.
Each time a customer taps or enters a card, the transaction moves through a network of participants:
The issuing bank charges an interchange fee, which flows through the acquirer and lands on your monthly statement. These fees support everything from fraud checks to infrastructure and network upkeep.
Fees usually combine two components:
For example, on a $100 sale with a 1.5% + $0.20 rate, you'd pay $1.70 in interchange. One sale doesn't sting. But across thousands of payments, the impact grows quickly.
Several factors shape the fee applied to a transaction:
Learn the difference between card-present and card-not-present transactions.
Card networks set interchange tables and publish them periodically. These rates are collected by issuing banks but not determined by them.
In the UK and EU, consumer card interchange is capped:
These caps exclude commercial and foreign-issued cards, where fees can be significantly higher.
Interchange isn't just a processing charge. It helps fund the tools that protect transactions. Issuers use it to:
For merchants, this means fewer bounced payments, less fraud exposure, and quicker access to verified funds.
Interchange fees show up everywhere, whether you notice them or not. Here's where they have the most impact:
For card-heavy businesses, these fees represent a notable cost line. For low-margin models, that's a serious concern.
To absorb the cost, some businesses:
Not every business can absorb higher fees. But refusing card payments outright risks lost sales and lower customer satisfaction.
Since interchange is bundled with other charges, clarity is key. Review:
Even if card payments cost more, offering choice helps drive loyalty. Removing options often backfires.
You can't control the interchange rate, but you can control how it affects your business. Consider:
|
Tactic |
Description |
|
Promote lower-cost methods |
Debit cards, bank transfer, or local wallets |
|
Revisit your MCC |
Some businesses qualify for reduced interchange |
|
Use local acquiring |
Avoid cross-border uplift fees by processing locally |
|
Route transactions smartly |
Use systems that steer payments to the lowest-cost path |
|
Reassess processor charges |
Focus on administrative and markup fees, which are negotiable |
If you operate in multiple markets, your interchange exposure won't look the same everywhere.
Watch for:
To manage:
Cardholders don't pay interchange, but they benefit from it:
These perks build trust in card payments – and keep customers spending.
The discussion around fee regulation continues. Some see caps as essential for protecting smaller merchants. Others argue they limit investment in fraud systems and rewards.
Governments walk a tightrope: keep fees fair without undermining the payment infrastructure.
If you haven't audited your interchange exposure recently, it's time. Start by:
Looking ahead, align with a provider who offers:
Antom partners with businesses to decode complex fee structures and make card acceptance more cost-effective – without compromising on the customer experience.