Understanding Interchange Rates on Card Brands

When a business accepts credit or debit card payments, each transaction involves multiple parties: the cardholder, the merchant, the merchant’s bank (acquirer), the cardholder’s bank (issuer), and the card brand (Visa, Mastercard, Discover, American Express). At the core of this system are interchange rates, which play a critical role in determining your overall cost of accepting card payments.

What Are Interchange Rates?

Interchange rates are fees set by the card brands (e.g., Visa, Mastercard, Discover, American Express) and paid by the merchant’s bank to the cardholder’s bank for each transaction. These rates are non-negotiable and are applied universally across all processors.

• Visa and Mastercard publish their interchange tables online and update them typically twice per year (April and October).
• Discover and American Express also establish their own interchange rates, though their structures may vary.

Your processor (Vantage Card Services) passes these costs through directly—ensuring transparency—along with any applicable processor fees.

Why Do Interchange Rates Exist?

Interchange is designed to:

• Cover Issuer Costs – such as fraud prevention, transaction processing, and credit risk.
• Maintain Payment Network Security – funding the infrastructure and compliance that keep card payments safe.
• Support Rewards Programs – many consumer reward points, miles, or cashback programs are funded in part through interchange.

Factors That Influence Interchange Rates

The rate charged on a transaction depends on multiple factors, including:

• Card Type – Debit cards usually carry lower interchange than credit cards; rewards and corporate cards often have higher rates.
• Transaction Method – Card-present transactions (swiped, dipped, tapped) are typically lower cost than card-not-present transactions (online, keyed).
• Merchant Category Code (MCC) – Different industries may qualify for different interchange categories (e.g., retail vs. nonprofit vs. fuel).
• Transaction Data Quality – Providing enhanced data (such as invoice number, tax amount, or Level II/III data) can help qualify transactions at lower interchange rates.

How Interchange Impacts Your Costs

Since interchange is a base cost set by the card brands, all merchants—regardless of processor—pay the same published rates. The difference lies in how your processor passes through interchange and any additional fees.

At Vantage Card Services, we use interchange-plus pricing, which means:

• You see the actual interchange rate charged by the card brands.
• A transparent markup (processor fee) is applied.
• No hidden bundling or inflated “tiered” rates that obscure what you’re paying.

Best Practices to Manage Interchange Costs

While you cannot negotiate interchange rates, you can take steps to help ensure your transactions qualify at the lowest possible category:

1. Process Transactions as Card-Present Whenever Possible – Swiped, dipped, or tapped transactions are less risky than keyed.
2. Use Address Verification (AVS) and CVV – For card-not-present transactions, this helps reduce fraud and may improve interchange qualification.
3. Provide Enhanced Data – Especially for B2B or government transactions, submitting Level II/III data can significantly reduce interchange.
4. Settle Batches Daily – Late batch settlement can downgrade transactions to higher interchange categories.
5. Work with a Transparent Processor – Interchange-plus pricing ensures you pay the true interchange costs without hidden markups.

Key Takeaway

Interchange is the foundation of card payment costs, set by the card brands and universally applied. While merchants cannot change these rates, understanding how they work—and adopting best practices to qualify for the lowest rates—can help minimize expenses and maximize efficiency.

If you have questions about how interchange impacts your business or how to optimize your transactions, please contact Vantage Card Services Client Support. We’re here to help you navigate interchange and get the most value from your merchant account.

💳 What Are Interchange Rates?

• Fees set by Visa, Mastercard, Discover, Amex
• Paid by the merchant’s bank → cardholder’s bank
• Non-negotiable → the same across all processors
• Updated twice a year (usually April & October for Visa/Mastercard)

⚖️ Why Do Interchange Rates Exist?

• 🛡️ Fraud & Risk Protection – covers issuer costs
• 🔐 Network Security – maintains secure card systems
• 🎁 Rewards Programs – funds points, miles, cashback
• ⚙️ Transaction Processing – ensures reliability

🔎 What Affects the Interchange Rate You Pay?

1. Card Type
   • Debit = 💲 lower fees

   • Rewards / Corporate = 💲💲 higher fees

     Transaction Method

   • Swiped / Dipped / Tapped (card-present) ✅

   • Online / Keyed (card-not-present) ❌ higher cost

     Industry / MCC

   • Retail vs. Nonprofit vs. Fuel → different categories

     Transaction Data

   • More details (Level II / III data) = lower interchange

💵 How Interchange Impacts You

• Every merchant pays the same base interchange set by the card brands

• The difference is how processors bill it

  At Vantage Card Services → Interchange-Plus Pricing

  • ✅ Transparent
  • ✅ True card brand costs passed through
  • ✅ No hidden markups

🛠️ Best Practices to Lower Your Interchange Costs

• ✅ Process as card-present whenever possible
• ✅ Use AVS + CVV for online/keyed transactions
• ✅ Provide enhanced data for B2B/government payments
• ✅ Settle batches daily to avoid downgrades
• ✅ Work with a transparent processor

📌 Key Takeaway

👉 Interchange rates are set by the card brands and cannot be negotiated.

👉 What you can control: how you process transactions and choosing a processor who passes through true costs with no hidden fees.

💡 Questions about interchange and how it affects your business? Contact Vantage Card Services Client Support — we’re here to help you optimize your processing.