Interchange Fees Explained for Business Owners

What Are Interchange Fees?

Interchange fees are the largest component of credit card processing costs. They are set by card networks like Visa and Mastercard and paid to the bank that issued the customer's card. Every time a cardholder makes a purchase at your business in Palm Bay, Melbourne, or anywhere in Florida, interchange applies.

How Interchange Rates Are Determined

Interchange rates vary based on several factors:

• Card type: Rewards cards carry higher interchange than basic debit cards
• Transaction method: Card-present (swiped/dipped/tapped) costs less than card-not-present (online/phone)
• Business category: Your MCC code determines which interchange table applies
• Transaction size: Some categories have different rates for different dollar amounts

Interchange-Plus vs. Tiered Pricing

How your processor bills interchange makes a significant difference. With interchange-plus pricing, you see the actual interchange cost plus a transparent markup. With tiered pricing, transactions are grouped into qualified, mid-qualified, and non-qualified buckets that obscure the true cost.

Brevard County merchants processing significant volume should always request interchange-plus pricing for full transparency. Learn more in our complete processing fees guide.

Common Interchange Categories

• Regulated debit (Durbin Amendment): typically 0.05% + $0.21
• Standard consumer credit: typically 1.51% - 2.10%
• Rewards/premium credit: typically 1.80% - 2.40%
• Commercial/corporate cards: typically 2.50% - 3.30%

How to Reduce Your Interchange Costs

• Use EMV chip readers and contactless terminals for lower card-present rates
• Ensure your MCC code accurately reflects your business
• Settle batches daily to avoid downgrades
• Provide Level II/III data for B2B transactions
• Consider a cost reduction strategy

Frequently Asked Questions About Interchange Fees

What are interchange fees and who sets them?

Interchange fees are charges set by card networks like Visa and Mastercard, paid to the bank that issued the customer's card. They are the largest component of credit card processing costs and are updated twice per year.

Can I negotiate interchange fees?

Interchange fees themselves are non-negotiable because they are set by the card networks. However, you can negotiate your processor's markup, which is the fee your processor adds on top of interchange. Switching to interchange-plus pricing gives you visibility into the actual interchange cost.

Why do rewards cards have higher interchange fees?

Rewards cards carry higher interchange rates because the issuing bank uses part of the interchange revenue to fund cardholder rewards like cash back, points, and airline miles. Premium and corporate cards typically have the highest interchange rates.

What is the difference between interchange-plus and tiered pricing?

Interchange-plus pricing shows the actual interchange fee plus a transparent markup from your processor. Tiered pricing groups transactions into qualified, mid-qualified, and non-qualified buckets, which obscures the true cost and typically results in higher fees.

How can I lower my interchange costs?

Use EMV chip readers and contactless terminals for lower card-present rates, ensure your MCC code is accurate, settle batches daily to avoid downgrades, and provide Level II/III transaction data for B2B payments. A free statement audit can identify specific savings opportunities. Merchants in Brevard County can get a free savings audit to see if interchange-plus pricing would save them money.