Card Association Pass-Through Fees

Overview

Helping you better understand the complexity of Visa, MasterCard, and Discover acceptance cost

Interchange is the transfer rate exchanged between the merchant’s and cardholder’s financial institution each time a payment card is used.

Its primary role is to create the right balance of incentives between cardholders’ financial institutions – which promote and issue payment cards to consumers – and merchants’ financial institutions – which enroll and process transactions for merchants.

  • Interchange is set in a highly competitive and dynamic environment by the card associations and the Federal Reserve for debit card transactions initiated from cards issued by financial institutions with more than $10 billion in assets.
  • Interchange is set in a manner that balances the value and economics among all parties — merchants, financial institutions, and cardholders. If interchange is too low, then cardholders’ financial institutions won’t issue cards; if interchange is too high, merchants won’t accept them.
  • Interchange rates and qualification criteria are the same for all acquirers and issuers and cannot be negotiated by the merchant.
  • There is a cost to accept payment cards, just as there is a cost to accept cash, checks, and other forms of payment. For example, it takes time to count and deposit cash, and cash may disappear as a result of errors or theft. Checks can be delinquent or cause losses to merchants because of a lack of funds in the check writer’s account. The cost to accept electronic payments may be more apparent to merchants, however, because they are directly billed for the service.
  • Interchange is consistently monitored and adjusted — sometimes increased and sometimes decreased — in order to assure the economics and value of the transaction are balanced for all parties. Such adjustments enable the payment networks to expand the types of payments consumers can make with their cards, including payments for small-ticket items, rent, utilities, and even mass transit.
Fee schedule

Learn more about interchange rates and processing fees. 

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Fee Schedule

How are fees calculated?

A significant amount of the fees we charge you for processing your payment card transactions represent fees we must pay to the issuing banks (or that are otherwise charged to us by Visa, MasterCard, Discover, and PIN-based Debit Networks, the “card associations”). 

This amount, called “Interchange” varies based upon a complex series of interchange levels that may apply to the transaction depending upon a number of factors – such as the type of card presented, specific information contained in the transaction, how and when the transaction is processed, your industry, and other factors. In addition, the card associations charge other fees that are not considered interchange, such as network access fees.

Qualifications

How are rates determined?

A portion of the rate we charge you will depend on the type of transaction and the interchange level at which the transaction is processed.

In order to qualify for any specific interchange level, you must satisfy certain qualification criteria established by the card associations.

  • Some interchange levels require that you utilize certain additional services such as Address Verification Service (AVS). Some interchange levels also require that you transmit detailed transaction data such as order numbers or hotel folio numbers. Other interchange levels require that you transmit certain indicators reflecting the nature of your transactions (such as an “E-Commerce indicator” for internet transactions).
  • Interchange levels may also be restricted to merchants in certain Merchant Category Codes (“MCC”) such as Supermarkets or Automated Fuel Dispensers (AFD).
  • In some cases, transactions may be processed at a more costly interchange level solely as a result of the type of card that is presented. For example, rewards or commercial cards, among others, will generally be assessed a higher interchange level.
  • If you utilize terminals, software or equipment provided or configured by any third party, be aware that failure by these systems to correctly and accurately transmit information in the required formats may result in your transactions not qualifying for the most favorable interchange levels.

Notifications

When will I be notified about updates to Interchange? 

In general, the card associations release modifications to interchange rates, qualification criteria, or introduce new fee programs bi-annually; however, these times may vary.

To view changes made by the card associations for a specific time, please download the corresponding document listed below.

Details you need to make a smart decision

In the event of any ambiguity or conflict, the interchange requirements established by the card associations will determine the interchange level at which your transactions qualify.