Interchange

Also called interchange fee, swipe fee, IC

The slice of every card sale that goes to the bank that issued your customer's card. It is the biggest single cost in card acceptance.

What it is

Interchange is the fee the card-issuing bank keeps out of each transaction. Visa and Mastercard do not receive it; they publish the rate tables and enforce them, but the money lands at Chase, Capital One, a credit union, whoever gave your customer the plastic. Interchange funds rewards programs, credit risk, and issuer profit. For most small merchants it is 70%-90% of total processing cost. There is no single interchange rate. There are hundreds of categories, set by card type (regulated debit, unregulated debit, consumer credit, rewards, premium consumer, commercial, purchasing, government), by how the card was accepted (chip-dipped, tapped, keyed, e-commerce with or without 3-D Secure), by merchant category code, and by what data you passed with the sale. Regulated debit at large issuers is capped by the Durbin Amendment at 0.05% + $0.21. Typical US consumer credit card-present interchange runs roughly 1.5%-2.1% plus a per-item fee; premium rewards and commercial cards run higher, and B2B commercial card-not-present interchange can reach 2.70% + $0.10 before optimization. Those upper-band figures are directional; the authoritative source is the published Visa and Mastercard interchange schedules, refreshed each April and October. Interchange is not negotiable by a small merchant. What is negotiable is everything wrapped around it: whether your processor passes it through at cost, marks it up invisibly, or buries it inside a blended rate. That distinction is the entire subject of this glossary. One 2026 change matters. The Rule 23(b)(2) injunctive-relief settlement in MDL 1720 received preliminary approval in June 2026. If finally approved, it cuts average effective credit interchange by 10 basis points for five years, freezes posted commercial, premium and standard consumer rates at March 31, 2025 levels for five years, and caps standard consumer credit at 1.25% for eight years. Nothing on your statement has changed yet, and objectors including the National Retail Federation and NACS may appeal.

Why it matters to your business

Interchange is the number that determines whether your processing cost is fair. A merchant doing $60,000 a month with a healthy card mix might see a true blended interchange cost near 1.75%, or about $1,050. If your effective rate is 3.15%, roughly $840 a month is going to someone other than the issuing bank. In that example that is $10,000 a year, and it is the difference between a part-time hire and no hire. You cannot lower interchange. You can absolutely lower what sits on top of it, and you can capture lower interchange categories by passing better data, accepting cards the right way, and not letting transactions downgrade. Everything you can control lives above the interchange line.

Where it gets contested

The industry line is that interchange is the price of a functioning payment system: fraud guarantees, instant authorization, guaranteed funds, and consumer credit underwriting a merchant would otherwise extend themselves. That argument is not fake. What it conveniently omits is that merchants pay for a rewards arms race they did not choose. Every additional airline mile on a premium card is funded by an interchange rate the merchant cannot decline and cannot see at the point of sale. The more useful fight is about pass-through. Merchant Cost Consulting's analysis of the 2026 settlement is blunt: interchange savings 'won't automatically reach merchant statements - processors sitting between merchants and card networks control pass-through.' If your pricing is tiered or flat-rate, a 10 basis point network-level reduction is invisible to you and becomes processor margin. If your pricing is interchange-plus, it flows to you automatically the month it takes effect. Processors know this. It is the reason interchange-plus is the standard offer to a national chain and the exception for a Cape Coral pizzeria. The same asymmetry sits under the Regulation II fight. In August 2025 a federal court in North Dakota vacated the Fed's debit interchange standard entirely, staying its own ruling pending appeal; the Eighth Circuit heard argument in May 2026. If the cap is rebuilt lower, merchants on flat-rate or tiered pricing capture none of it.

How to check it yourself

Pull a monthly statement that includes an interchange detail page - request 'interchange qualification detail' if it is not there. Add up every line labeled interchange and divide by total card volume for the month. That is your true interchange cost. Then divide total fees charged by total volume for your effective rate. The gap between those two numbers is what your processor is making. Ask them to confirm it in writing.

Receipts

Claims above that are checkable, with where to check them. Published so you do not have to take anyone's word for it.

Regulated debit interchange is capped at 0.05% + $0.21 under Durbin
federalreserve.gov ↗
The June 2026 settlement cuts average effective credit interchange 10 bps for 5 years, freezes posted rates at March 31, 2025 levels, and caps standard consumer credit at 1.25% for 8 years
americanbar.org ↗
Interchange savings do not automatically reach merchant statements because processors control pass-through
merchantcostconsulting.com ↗
Visa's April 2026 schedule prices Commercial Card Not Present at 2.70% + $0.10
paymentnerds.com ↗