Interchange Fee

Definition

A fee paid by the acquiring bank to the issuing bank each time a payment card transaction is processed, representing the largest component of the merchant discount rate. Interchange fees are set by card networks (Visa, Mastercard) and vary by card type, merchant category, transaction method (card-present vs card-not-present), and jurisdiction. EU interchange fees are capped at 0.2% for debit and 0.3% for credit consumer cards under the Interchange Fee Regulation (2015/751). In the US, the Durbin Amendment caps debit interchange for large issuers.