Interchange Fee
A fee paid by a merchant's bank to the cardholder's bank each time a card payment is processed, which ultimately affects consumer pricing.
Also known as: interchange, card interchange
Last reviewed: 10 June 2026
When you pay by card, the merchant does not receive the full amount. A small percentage — the interchange fee — flows from the acquiring bank (the merchant's bank) to the issuing bank (your bank). Interchange rates are set by card networks and vary by card type, merchant category, and region; premium rewards cards typically carry higher interchange fees.
Interchange fees are mostly invisible to consumers, but they influence the economics of fraud. High-interchange cards are more attractive for fraudsters because they indicate premium cardholders with higher spending limits. They also fund card rewards programs, which is why rewards cards cost merchants more.
In some jurisdictions, regulators have capped interchange fees on consumer cards (the EU caps them at 0.2% for debit and 0.3% for credit). Understanding interchange helps consumers appreciate why some merchants surcharge card payments or offer cash discounts.