Understanding Interchange Fees

When you research payment solution providers, you’ll start hearing the term “interchange” used when talking about payments. Interchange is the fee that credit card companies like Visa and Mastercard charge businesses to accept their cards.

The interchange fee depends on a number of factors and isn’t always easy to understand. In this article, we will break down credit card interchange fees so you will know exactly how much you’re spending when running your business.

In this post:

  • What are interchange fees?
  • How much does interchange cost?
    • Visa interchange fees
    • Mastercard interchange fees
    • Discover interchange fees
    • American Express interchange (OptBlue)
  • What is the total cost of accepting credit cards?
    • Set rate processing
    • Subscription rate processing

What Are Interchange Fees?

Interchange is the fee credit card companies charge businesses to accept their cards. You pay the brand for the convenience of accepting this payment method since your customers want to use them.

Interchange fees help cover the risks associated with accepting electronic payments while ensuring that your company has access to guaranteed payment when a customer makes a purchase. Interchange is simply a cost of doing business.

How Much Does Interchange Cost?

Interchange fees vary widely across card brands, card types, and how you process cards. Generally, debit cards are much cheaper than credit cards for you to process. Swiping a card instead of keying it into the terminal also will help you save. And exempt debit cards – those issued by a bank with less than $10 billion in assets, often a local bank or credit union – have some of the highest interchange rates of all.

While you have control over whether a customer’s card is swiped or keyed in, you can’t control what kind of card they use. That’s why interchange varies so widely. For a $100 transaction, a swiped Mastercard debit card will cost you 27¢. However, for the same transaction using a Visa corporate commercial credit card will cost you $2.60. It’s easy to see how over the course of the year these fees can stack up.

Below, we’ll give a sampling of interchange rates for the most popular card brands.

Visa Interchange Fees

Interchange Rate (Swiped) Interchange Rate (Keyed)
Visa Retail – Debit 0.80% + 15¢ 1.65% + 15¢
Visa Retail – Credit 1.51% + 10¢ 2.10% + 10¢
Visa Retail – Credit Rewards Traditional 1.65% + 10¢ 1.95% + 10¢
Visa Restaurant CPS – Debit 1.19% + 10¢ 1.65% + 15¢
Visa Restaurant CPS – Credit 1.54% + 10¢ 1.80% + 10¢
Visa Credit Restaurant Rewards Traditional 1.95% + 10¢
Visa Credit Retail Corporate Commercial 2.50% + 10¢ 2.70% + 10¢
Visa Business – Debit 1.70% + 10¢ 2.45% + 10¢
Visa Business – Credit 2.150 + 10¢ 2.650% + 10¢

See full Visa interchange rates.

Mastercard Interchange Fees

Interchange Rate (Swiped) Interchange Rate (Keyed)
Mastercard Retail – Debit 0.05% + 22¢ 0.05% + 22¢
Mastercard Retail – Credit Core 1.58% + 10¢ 1.89% + 10¢
Mastercard Retail – Credit Rewards Enhanced 1.73% + 10¢ 2.04% + 10¢
Mastercard Restaurant – Debit 0.05% + 22¢
Mastercard Restaurant – Credit 1.73% + 10¢
Mastercard Credit Retail World 1.77% + 10¢ 2.05% + 10¢
Mastercard Credit Retail World Elite 2.20% + 10¢ 2.5% + 10¢

See full Mastercard interchange rates.

Discover Interchange Fees

Interchange Rate (Swiped) Interchange Rate (Keyed)
Discover – Debit 1.10% + $0.16 1.75% + $0.20
Discover – Credit 1.56% + $0.10 1.87% + $0.10
Discover – Rewards Credit 1.71% + $0.10 1.97% + $0.10
Discover – Premium Plus Credit 2.15% + $0.10 2.40% + $0.10
Discover Commercial Credit 2.30% + $0.10 2.30% + $0.10
Discover Recurring – Debit 1.20% + 5¢
Discover Recurring – Credit 1.35% + 5¢

* These rates are an estimate based on 3rd party reported numbers. To access full Discover interchange rates, you need to use a verification code provided by your acquirer.

American Express Interchange Fees

American Express works differently from the other brands in that the card type does not impact the processing rate. Instead, your industry or merchant category code will play a larger role in deciding how much you pay out.

For smaller businesses, you’ll probably be accepting American Express through their program called OptBlue. Through OptBlue, your payment technology provider will determine how much you pay for AmEx and bundle it in with the ability to accept more popular card types. This way, you can accept AmEx customers (who historically have higher ticket prices) without breaking the bank.

You can read more about the OptBlue program at Merchant Maverick.

How Much Do You Pay?

At the end of the day, how much you’re paying for credit card processing relies on your payment solutions provider. Many payment processors like Stripe, Square, PayPal, and bank merchant services offer flat rate processing. Some others, including Stax, offer subscription-style processing that gives you access to the lowest rates of interchange.

Here’s how these different rates work:

Set Rate Processing

With set rate processing, you have a non-negotiable fee per credit card transaction, regardless of card or industry type. For instance, Stripe charges 2.9% + 30¢ per transaction. So whether you’re accepting a debit card with a 0.05% + 22¢ interchange rate or a corporate card with a 2.50% + 10¢ interchange rate, you pay the same rate.

While this may seem simpler at first, the reality is that you could be overpaying for credit card processing with these systems. In the example above, Visa would receive the .05% + 22¢, while Stripe would be making a whopping 2.5% + 8¢ on your transaction. That’s why we introduced simple subscription pricing.

Flat Subscription Rate Processing

Subscription-based processors have a similar concept to other subscription services you’re used to, such as warehouse stores like Costco. You pay a low fee to get access to warehouse pricing on goods, where you then can buy as much as you want with no cap on savings.

Stax’ subscription pricing starts at just $99 per month. Regardless if your sale is $50 or $5,000, you pay the flat cost of processing without a percent markup.

Every business is different, which is why we don’t believe in one-size-fits-all solutions. Contact us today and request a custom savings quote for your current credit card statement. Based on the types of cards your customers are using and your average transactions, we’ll be able to show you exactly which type of plan makes sense for your business.

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