The interchange fee is a fee paid by the merchant’s bank (the acquirer) to the customer’s bank (the issuer) for every card transaction. It makes up the largest portion of the total transaction fee paid by the merchant. The fee rates are set by the card networks (Visa, Mastercard, etc.) and vary based on factors like card type (debit vs. credit, rewards vs. standard), transaction type (in-person vs. online), and the merchant’s industry.
Frequently Asked Questions (FAQs)
- Who sets the interchange fees?
The card networks, like Visa and Mastercard, set the interchange rates. They publish tables with hundreds of different rates twice a year. - Why do interchange fees exist?
They exist to compensate the issuing bank for the cost and risk associated with approving a transaction. This includes covering the risk of fraud and the cost of rewards programs. - How does this affect the fees I pay to Stripe?
Stripe uses a flat-rate pricing model, which means they bundle the variable interchange fee, assessment fees, and their own markup into a single, predictable rate. This simplifies things for you, as you don’t have to worry about the hundreds of different interchange rates.
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