What is Interchange Pricing Structure?

Interchange Pricing, also known as Interchange Plus, is a transparent billing model where you, the merchant, are charged the actual cost of processing a card transaction (the interchange fee) plus a small, fixed markup from your payment processor.

Why do I see so many different fees on my statement?

Interchange fees vary based on several factors, and each transaction is priced individually. Here’s what’s happening behind the scenes:

1. Interchange Fee: this is the base fee set by the card networks (Visa, Mastercard, Amex, Discover) and paid to the cardholder’s bank. It typically includes:
    • A percentage of the transactions (e.g., 2.8%)
    • A fixed fee (e.g., $0.50)
2. Assessment Fee: charged by the card networks for using their infrastructure.
3. Discount Fee: this is your payment processor’s cost for providing service: usually a small, fixed percentage or per-transaction fee.

When you see multiple line items on your statement, they reflect:

• The interchange fee (which varies by card type, transaction method, and industry)
• The dues and assessment fees
• The processor discount for providing services

Why does the interchange fee vary so much?

Each transaction is evaluated based on:

• Card type: debit, credit, rewards, corporate, etc.
• Transaction method: in-person (card-present) vs. online (card-not-present)
• Merchant category: your business type affects your Merchant Category Code (MCC)
• Security level: transactions with more data (e.g., AVS, CVV, tokenization) often qualify for lower rates 

What are the benefits of Interchange Pricing?

• Transparency: you see exactly what the card networks charge and what your processor adds.
• Fairness: you’re not overpaying for low-cost transactions.
• Optimization potential: you can adjust how you process payments to qualify for lower interchange rates.

What should you watch out for?

• Complexity: statements can be long and detailed.
• Downgrades: missing data or delayed settlement can push a transaction into a higher-cost category. With diligence, you can maintain this more effectively.

What does Interchange Pricing look like on my merchant statement?

Below you’ll find an example image of what interchange fees would look like on your merchant processing statement. For further details, check out the article linked below.