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Interchange fees are basically the fees that merchant services have to pay to banks and issuers.
These fees are set by the credit card associations and are part of the various fees that banks deduct from merchants' credit card sales. Interchange fees have a complex pricing structure, which is based on the card brand, the type of credit or debit card, the type and size of the accepting merchant, and the type of transaction (e.g. online, in-store, phone order). In the United States, the fee averages approximately 2% of transaction value. |
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- For example, imagine a consumer making a $100 purchase with a credit card. For that $100 item, the retailer would get approximately $98. The remaining $2, known as the merchant rates and fees, gets divided up. About $1.75 would go to the card issuing bank, $0.18 would go to Visa or MasterCard association (defined as assessments), and the remaining $0.07 would go to the retailer's merchant account provider.
- Click here to see how a transaction is processed.
For the latest interchange rates go to:
Mastercard:
http://www.mastercard.com/us/merchant/pdf/MasterCard_Interchange_Rates_and_Criteria.pdf
Visa:
http://usa.visa.com/merchants/operations/interchange_rates.html
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Every April and October VISA and MasterCard releases new base rate changes. Most merchants are led to believe that all rates increase which is not true in any capacity whatsoever. Many times they may actually decrease rates or do not change any existing rate. Most processors use this as an opportunity to raise their rates above those increases mandated by VISA and MasterCard Association and blame it on Visa/MasterCard. Tiered merchants with Qualified, Mid -qulified and Non-qualified fees are usually a target for such abusive rate increases. |
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