E-commerce Glossary – Interchange Fee

This term refers to the fee that the card-issuing bank (the cardholder’s bank) charges the acquiring bank (the merchant’s bank) for every card payment. Banks do not set the interchange fee themselves. Setting the fee amount is the responsibility of the card schemes (Visa, Mastercard, American Express…)

What Is the Interchange Fee?

The interchange fee (Interchange Fee) is one of the three main card processing fees. This fee is charged by the card issuer to the merchant’s bank and is an integral part of the merchant fee.

Who Pays This Fee?

Paying the interchange fee is the merchant’s obligation. This fee is automatically deducted when the transaction is processed. When the cardholder makes a purchase and authorizes the transaction, the merchant’s bank receives the funds from the cardholder’s bank, reduced by the amount of the interchange fee.

Interchange Fee – Mastercard

The fee is charged every time an online payment is made with a Mastercard payment card. The fee is paid by the merchant and is collected automatically during settlement. You can find more about these fees at https://www.mastercard.us/en-us/business/overview/support/merchant-interchange-rates.html

Interchange Fee – Visa

The fee is charged every time an online payment is made with a VISA payment card. The fee is paid by the merchant and is collected automatically during settlement. See what VISA says about interchange fees at https://usa.visa.com/support/small-business/regulations-fees.html

What Does the Interchange Fee Depend On?

The amount of the interchange fee is regulated in advance and transparent. The amount of this fee is primarily affected by:

1. The location of the card-issuing bank relative to the merchant’s location – Banks in Serbia have a clearly defined fee that they charge each other. IntraEuro fees are those set in all European countries for payments between entities within the EU, while InterEuro fees are set for payments between European entities that are not EU members.
2. The card type – Debit cards always have lower interchange fees than credit cards.

What Is Interchange ++?

Interchange ++ is a pricing model most commonly used in Europe and North America. When a card transaction is processed through an acquiring bank, there are three main fees that must be paid.

1. The fee charged by the card-issuing bank (interchange)
2. The card scheme fee charged by Visa or Mastercard, or “scheme fee” (which represents the first + in the name)
3. The fee of the acquiring bank, i.e. the merchant’s bank (the second + in the name)