What "interchange" really is, and why your rewards card costs you
The biggest line on your statement is set by Visa and Mastercard — not your processor. Here's how it actually works.
MV
By Marcus Vélez, lead agent
Most merchants know they pay a percentage every time a card swipes. Few know where that percentage actually goes. The honest answer: the majority of it never touches your processor. It flows straight to the bank that issued your customer’s card — and the card networks set the rate.
That fee is called interchange. It’s the floor under every processing rate you’ve ever been quoted. Your processor cannot discount it, cannot absorb it, and cannot negotiate it away — because they don’t control it. Visa and Mastercard do.
~70%of a typical merchant fee is interchangepaid to the card-issuing bank, not your processor
0how much your processor can discount interchangeit's a fixed pass-through cost
300+interchange categories Visa publishescard type, transaction method, and industry all matter
2×/yrwhen rates update: April and Octoberyour statement shifts without notice from your processor
Why the card your customer swipes changes what you pay
Interchange isn’t one number. It’s a table of rates that shifts based on the card type, how the transaction was submitted, and what industry you’re in. A debit card and a travel-rewards Visa hitting the same terminal on the same day land in completely different fee buckets.
Illustrative interchange rates by card type. Higher rewards = higher interchange — paid by the merchant, not the cardholder.
Debit (PIN)
~0.8%
Basic credit
~1.8%
Rewards credit
~2.4%
Corporate / AmEx
~2.9% — 3.6× debit
What you can change, and what you can't
Your total processing cost has three components. Only one of them is negotiable. The other two are set by the card networks and flow through every processor at the same cost.
Interchange + assessments are fixed pass-throughs. Only the processor margin is yours to negotiate.
Component
Who sets it
Negotiable?
Interchange
Visa / Mastercard / Discover
No
Assessments
Card brands (brand fees)
No
Processor margin
Your processor
YES — this is the only lever
“
A flat rate sounds simple until you realize the processor chose it because it’s simpler for them — not because it’s cheaper for you.
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