What is Interchange Plus Pricing?
Credit card interchange fees are fees that merchants must pay to the credit card networks (Visa, Mastercard, American Express, Discover, etc.) when they accept credit card payments. These fees are typically a percentage of the transaction amount, usually ranging from 1% to 3%.
The interchange fee is not a single fee, but rather a combination of several different fees that are paid by the merchant’s acquiring bank to the card issuer’s issuing bank. The specific fees that are included in the interchange fee can vary depending on the type of card used (debit, credit, rewards, etc.) and the card network involved.
Some of the fees that may be included in the credit card interchange fee are:
- Card brand fee: This is a fee charged by the card network (Visa, Mastercard, etc.) for using their brand and payment processing services.
- Assessment fee: This is a fee charged by the card network to cover the costs of maintaining the payment processing infrastructure.
- Transaction fee: This is a fee charged by the issuing bank for processing the transaction.
- Risk fee: This is a fee charged by the issuing bank to cover the risk of fraud and default.
- Processing fee: This is a fee charged by the acquiring bank (the merchant’s bank) for processing the transaction.
It’s important to note that the specific fees included in the interchange fee can vary depending on the merchant’s industry, the type of transaction, payment method (in-person or online/phone), and other factors.