All merchant accounts have associated interchange fees and assessments.
Interchange fees and assessments are paid every time a cardholder makes a purchase using a credit or check card (i.e., pinless debit card). It's important to note that all merchant accounts are subject to the same costs with respect to interchange fees and assessments.
As discussed in Credit Card Processing 101, interchange fees are paid to issuing banks (i.e., the banks that issue credit cards). If Sally makes a $100.00 credit card purchase and the interchange rate for that purchase is $0.10 plus 2.1% of the total transaction amount, then Sally's credit card company will receive $2.20 as a result of that credit card purchase.
In reality, there are many interchange rates. Interchange rates can vary by industry, card type (credit vs. debit), riskiness of the transactions and many other factors. Interchange rates for "card present" transactions (where the card is physically present when the transaction is processed by the merchant) are typically lower than "card not present" transactions (where the card is not physically present as is true with e-commerce and mail-order transactions). Card not present transactions have a higher interchange rates because they are deemed to be more risky.
Interchange rates are set and published by the card associations (Visa and MasterCard). In most cases, interchange rates include a fixed dollar amount per transaction as well as a percentage. Here are a few examples of some Visa interchange categories and their associated rates:
Debit Card: CPS/e-Commerce Basic Regulated Debit
||0.05% + $0.22|
Debit Card: Non-Regulated E-Commerce Basic Debit
||1.65% + $0.10|
Credit Card: CPS/Retail 2
(excludes Visa Signature Preferred Cards)
|1.43% + $0.05|
Credit Card: Electronic Interchange Reimbursement Fee (EIRF)
(excludes Visa Signature Preferred cards)
|2.30% + $0.10|
For a list of current Visa interchange rates, please see:
For a list of current MasterCard interchange rates, please see:
Assessments are paid directly to the card associations (Visa or MasterCard).
The assessment rate for Visa is 0.13% for credit cards and 0.11% for debit cards. If a cardholder makes a $100 purchase using a Visa credit or debit card, then the Visa card association will receive $0.13 or $0.11 in assessment fees depending on the card type.
The assessment rate for MasterCard is 0.125%. If a cardholder makes a $100 purchase using a MasterCard credit or debit card, then the MasterCard card association will receive $0.125 in assessment fees.