Definition
The fee a merchant's bank pays the cardholder's bank on each card transaction, set by the card networks; the processor passes it to the merchant along with its own markup.
Also called: interchange, interchange rate
Key points
- The merchant's total cost is interchange plus network fees plus the processor's markup.
- Transactions that miss data requirements can be priced at a higher interchange category, called a downgrade.
- Dividing total fees by card volume gives the effective rate, the one number to compare month to month.
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