By alphacardprocess July 28, 2025
In 2025, interchange fees remain one of the very significant expenses for small businesses that accept card payments. Card network fees can have a direct influence on your bottom line. Understanding what they are, why they’re there, and how they work can help small business owners control costs more effectively and make better decisions regarding payment processing.
Interchange Fees: The Basics
Interchange fees are the fees that merchants pay for accepting debit and credit card payments. While it may seem like an additional charge, interchange fees enable businesses to accept fast and reliable payment methods most consumers prefer, making shopping more and more faster and much more secure.
The actual fee cost will vary based on factors such as the card type, payment method, your business, and location. Debit card payments tend to have lower fees compared to credit cards, as they involve less risk.
Although you can’t avoid interchange fees altogether, several measures can be taken to control them, such as promoting debit transactions, regularly monitoring your statements, ensuring that transaction information is always complete, and applying fraud protection tools to minimize chargebacks. Some companies also impose small surcharges for credit card payments to cover these expenses. Interchange fees can fluctuate over time, so staying informed helps keep costs in check.
How Much Does Interchange Cost?
Interchange costs are not the same for all transactions—they can differ significantly based on the card network, card type, and method of payment acceptance. Cards that offer rewards or points typically have higher interchange fees, and corporate or business cards are even much more expensive.
Debit card transactions, by contrast, are typically much more less expensive to process and have a lower interchange rate than credit cards. If the customer pays with a card in person and you swipe or tap it, the fee will typically be lower than for payments made online or manually keyed.
There is a loophole, however, debit cards from smaller banks or credit unions—usually referred to as “exempt” cards because the bank has less than $10 billion in assets and may have the highest interchange rates.
This is why interchange fees can fluctuate between a handful of payments. For instance, a $100 purchase on a swiped Mastercard debit card may set you back approximately 27 cents in interchange fees, but if they pay with a Visa corporate credit card, you may be paying as much as $2.60.
Credit Card Interchange Fee Calculation
Calculating credit card interchange fees is not a simple task due to the numerous details involved. The fee you pay will depend on various factors, such as the type of card your customer is using (a typical credit card, debit card, or rewards card) and how the customer makes the payment.
For instance, if the client pays in person and you tap or swipe their card, the charge is normally less than an online or phone transaction.
Another is your company’s merchant category code (MCC), which reflects what kind of business you’re in. Various industries may be charged with varying fee rates. Certain types of businesses, such as charities or travel agencies, tend to have lower interchange fees.
Being aware of these factors allows you to know why your fees may fluctuate in some payments. By monitoring them, you may see opportunities to lower your costs, such as promoting card-present transactions or ensuring your MCC is properly configured for your business type.
Visa Interchange Fees
Transaction Type | Card Type / Bank Classification | Interchange Fee |
CPS/Retail, Debit – Card Present | Exempt | 0.80% + $0.15 |
Regulated | 0.05% + $0.21 | |
CPS/Card Not Present, Debit | Exempt | 1.65% + $0.15 |
Regulated | 0.05% + $0.21 | |
CPS-Restaurant, Debit – Card Present | Exempt | 1.19% + $0.10 |
Regulated | 0.05% + $0.21 | |
CPS/e-Commerce Basic, Debit | Exempt | 1.65% + $0.15 |
Regulated | 0.05% + $0.21 | |
CPS/Retail, Prepaid | Exempt | 1.15% + $0.15 |
Regulated | 0.05% + $0.21 | |
Retail, Credit, Performance Threshold III | Visa Signature | 1.65% + $0.10 |
Visa Signature Preferred | 2.10% + $0.10 | |
Traditional Rewards | 1.51% + $0.10 | |
Small Merchant Product 2, Credit | Visa Signature | 1.43% + $0.10 |
Visa Signature Preferred | 1.88% + $0.10 | |
Traditional Rewards | 1.43% + $0.10 |
Mastercard Interchange Fees
Transaction Type | Program Name (Card Type) | Interchange Fee |
Restaurant | World (USD) | 1.85% + $0.10 |
World High Value (USD) | 2.00% + $0.10 | |
Small Ticket (<$5), Card Present | Core (USD) | 1.65% + $0.02 |
World (USD) | 1.90% + $0.02 | |
World High Value (USD) | 2.30% + $0.02 | |
Small Ticket (<$5), Card Not Present | Core (USD) | 1.95% + $0.02 |
World (USD) | 2.20% + $0.02 | |
World High Value (USD) | 2.60% + $0.02 | |
Regulated POS Debit, Purchases & Cash Back | Debit Rate (USD) | 0.05% + $0.21 |
Prepaid Rate (USD) | 0.05% + $0.21 | |
Payment Transactions, Debit & Prepaid Cards | Exempt Debit (USD) | 0.19% + $0.53 |
Exempt Prepaid (USD) | 0.19% + $0.53 | |
PIN Debit Payment Transaction | Rate (USD) | 0.19% + $0.53 |
PIN Regulated POS Debit | Rate (USD) | 0.05% + $0.21 |
Discover Interchange Fees
Card Type | Interchange Fee |
Discover Debit, card present | Exempt: 1.10% + $0.16 |
Regulated: 0.05% + $0.22 | |
Discover Debit, card not present | Exempt: 1.75% + $0.20 |
Regulated: 0.05% + $0.22 | |
Discover Consumer credit card | Swiped: 1.56% + $0.10 |
Keyed: 1.87% + $0.10 | |
Discover Rewards | Swiped: 1.71% + $0.10 |
Keyed: 1.97% + $0.10 |
American Express Interchange Fees
American Express interchange fees operate slightly differently from those of most other big card networks. Rather than charging fees based on card types, AmEx generally considers your business type and the Merchant Category Code (MCC) associated with it.
For most small businesses, the most simplest way to accept American Express is through a program known as OptBlue.
With OptBlue, your payment processor determines your AmEx rate and bundles it with your other card processing rates. This simplifies and often makes it cheaper to accept AmEx.
By using programs like OptBlue, small businesses can welcome AmEx cardholders without worrying about high fees. It keeps things manageable, helps you reach more customers, and makes your payment processing easier.
How are Interchange Fees Charged to Businesses?
If a customer pays with a credit card, the company pays an interchange fee, typically 1–2% of the transaction amount, although it can be slightly higher depending on the type of card and how it’s processed. It helps cover the cost and risk of processing electronic payments and is sent directly to the bank issuing the card.
The rate you are charged varies by factors such as the card brand (Visa, Mastercard, Discover, or American Express), whether the purchase was swiped, tapped, or entered manually, and whether the card is a regular credit card, rewards card, or business card.
Payment processors also structure these fees in various ways. Some employ interchange-plus pricing, While Others employ tiered pricing, organizing transactions into tiers such as “qualified” or “non-qualified”.
There’s also flat-rate pricing, where you pay a single fixed percentage regardless of what card or payment method is used, which is easy to do but could be more expensive in the long run.
Though the base of interchange fee is determined by card networks, your actual cost is determined by your processor’s model and any additional markups. Having an understanding of these facts can help you make more informed decisions regarding your payment processing and keep your expenses in line.
Interchange-Plus vs Flat Rate Fees: Advantages and Disadvantages
Interchange-plus is a popular option for most companies because it aims to be open and transparent. Under this type, you pay the genuine interchange fee established by the card associations, along with a predetermined markup established by your payment processor.
This configuration presents to you exactly how much of your cost is allocated to the processor and how much to the banks.
But there’s a catch. Since many factors can affect the interchange fee—such as card type, transaction method, and business category—it can be challenging to accurately predict your monthly costs.
Even if your processor only adds 2%, your final fee might still end up being over 4% once the actual interchange fees are factored in. Other payment processors may highlight the low markup but fail to clearly state the variable interchange component, which can create confusion.
Flat rate pricing, however, is straightforward. You pay the same percentage on all transactions regardless of what card your customer happens to use. This makes cost planning straightforward and simplifies budgeting.
However, the drawback is that you need to pay more in total, as the processor must charge a rate high enough to recover the costs of the more expensive card types and riskier transactions.
Transactional Factors That Influence Interchange Rates
Card Type
Various cards have different fees. Debit cards tend to have the lowest interchange fees, making them less costly for businesses to accept. On the other hand, American Express isis generally the most costly. Certain cards may be eligible for special, lower rates based on their pricing level, but accepting premium or rewards cards typically incurs additional costs.
Transaction Type
The type of transaction itself may affect your expenses. High-risk purchases, such as online shopping or e-commerce transactions, often incur higher interchange fees. Low-risk transactions, such as donations or face-to-face payments, are typically less expensive to process.
Time of Day and Week
It may come as a surprise to some business owners, but the timing of a sale can also influence the exchange rate. Certain cards charge varying rates for daytime, evening, or weekend transactions.
Payment Processor
Some merchant service providers use more than one payment processor to complete transactions. Each processor may have its fee structure, which means your rates could vary depending on your payment processor. It’s worth asking your provider if this applies to your business and what fees come with each option.
Merchant Category Code (MCC)
Each business has an MCC that corresponds to its category, and this code may affect your interchange rates. For instance, a service station might be charged higher rates than a retail establishment or restaurant for the same transaction amount.
Fraud Rates
If your company is at risk of chargebacks or processes high-riskhigh-risk transactions, your interchange rate may incur additional fees associated with fraud protection. More perceived risk can result in increased fees.
Payment Method
How your customer pays is important too. Transactions in which the card is physically present and is inserted into a chip reader (EMV) are safer and less expensive. Payments in which the card isn’t present—such as online purchases, phone transactions, or manual key-ins—are more risky and hence have higher interchange fees.
Merchant Location
Finally, your location may also affect the amount you pay. If you accept a payment from a foreign customer, you may incur additional cross-border fees, which are added to the usual interchange fee. For those doing business in countries like the United States but issuing cards for other countries, this can easily add up to more expenses.
Average Credit Card Interchange Rates
For credit card payments, interchange fees are only one component of the fees companies are charged, but they constitute a significant portion of the total. Here’s a quick breakdown of the typical interchange fees for processing payments.
For card-not-present transactions, such as internet purchases, phone transactions, or purchases via a virtual terminal, the interchange fee typically averages from around 1.60% + $0.10 to 2.60% + $0.15 per transaction.
For card-present transactions where the customer physically swipes, dips, or taps their card, the fees are typically lower. These typically range between 0.10% + $0.10 and approximately 2.35% + $0.10.
It’s worth noting that these averages do not count American Express, which tends to carry higher interchange fees than other card networks.
Also, keep in mind that these numbers only account for the interchange fees. Businesses also tend to incur additional fees, such as monthly service fees, PCI compliance fees, or equipment fees.
2025 Trends Affecting the Cost of Credit Card Processing
In 2025, Major card networks began to charge merchants higher interchange fees to cover their increasing operational costs. The card type your customers hold and how they pay—whether rewards card, corporate card, or debit card—also impacts what you pay in interchange fees. These variations require businesses to monitor which payment modes their customers use.
New AI technologies are enabling companies to catch and prevent fraudulent transactions. Improved fraud detection translates into fewer chargebacks, keeping costs low.
AI also enables companies to process payments more efficiently, reducing errors and enhancing the accuracy of every transaction. AI is not only enhancing security but also reducing the overall cost of credit card processing.
Increasingly, more consumers are using contactless cards or mobile payment systems, such as Apple Pay and Google Pay. These methods of payment are quicker and more convenient, but they have their own set of fee structures that can vary from standard card payments.
Companies must understand how these fees factor into their total expenses to make informed decisions about which payment methods to promote and utilize.
BNPL products such as Afterpay and Klarna are becoming increasingly prevalent, allowing clients to pay in installments. However, including these increases businesses’ processing fees and creates more complex transaction flows. Although BNPL can drive sales up by lowering the cost of purchase for customers, it can also drive payment processing costs.
Interchange Regulations and Their Impact on Fees
In 2025, new rules are set to take effect, affecting the fees that businesses pay to accept card payments. More stringent security requirements under PCI DSS 4.0 may require businesses to invest in new systems and training, potentially increasing expenses, but also protecting against data breaches.
At the same time, the Credit Card Competition Act would aim to promote greater competition among card networks, potentially leading to reduced interchange fees and certain processor fees. These changes make it crucial for businesses to stay informed and collaborate closely with payment processing partners to manage costs, remain compliant, and ensure the security of customer transactions.
Tips to Reduce Interchange Fees
Reducing interchange fees isn’t always easy because card networks determine the rates, which depend on various factors such as card type and the method of transaction processing. Still, there are practical steps businesses can take to lower these costs. First, if you process a lot of payments, you can often negotiate better rates with your payment processor.
Second, selecting the right payment processor for your business model can also be beneficial. Deciding how you process payments involves setting up secure technology, such as encryption and tokenization, and, if possible, with full transaction data.
Accepting customers’ payments by debit card or cash will lower expenses, as the cost of a debit card transaction is typically less than that of a credit card transaction.
Some companies also charge a minimal service fee on credit card transactions to offset interchange fees, although this is not permitted everywhere and may sometimes frustrate consumers.
Finally, review your monthly processing statements carefully to identify any discrepancies or additional fees that may have been incurred. These simple actions, combined, can help you manage and reduce interchange fees in the long run.
Other Types of Credit Card Processing Fees
When you accept credit cards from your customers, you incur multiple types of processing fees that typically range from 1.5% to 3.75% per transaction. However, the cost is determined by factors such as card type, network, and your payment processor’s model.
You’ll also pay an assessment fee to the card network itself for using its payment infrastructure, as well as processor fees for handling transactions, which may include per-transaction costs, monthly service fees, or additional services such as fraud protection.
Other periodic fees, such as chargeback fees, PCI compliance fees, and early termination charges, can also be significant. Although the networks standardize interchange and assessment fees, you should usually be able to negotiate with your payment processor to get more favorable rates or eliminate some additional fees.
How Much Do You Pay?
The amount you pay for processing credit cards largely hinges on your payment service provider. Flat-rate pricing is commonly used by businesses such as Stripe, Square, PayPal, and traditional bank merchant services, while others, like Stax, employ subscription-based models. Some businesses also have a minimum transaction value for card payments to help mitigate interchange costs.
Interchange Fee Regulation
Interchange fee rules vary from country to country, affecting the amount you pay and whether fees are capped. In the United States, for instance, the Durbin Amendment capped debit and prepaid card transaction fees, reducing fees for many retailers, particularly those handling a large volume of debit transactions.
In the European Economic Area (EEA), similar rules were introduced in 2015 to cap fees for cross-border payments. These changes aim to make payment processing clearer and more competitive for both businesses and customers.
More recently, there has been a drive towards transparency. There are now payment providers who introduce interchange plus pricing, which clearly states the three components of card payment cost: interchange fees, card scheme fees, and processor markup. This enables businesses to better understand their charges and make more informed decisions regarding payment processing.
Conclusion
Interchange fees are unavoidable when it comes to accepting card transactions, but being aware of how they operate can help small businesses keep costs in check. By staying current with regulations, selecting a suitable payment processor, and closely monitoring your transactions, you can effectively reduce interchange fees for an extended period.
FAQs
What are interchange fees?
Interchange fees are card network-imposed charges that businesses pay to card-issuing banks when they accept card payments.
Why do interchange fees differ?
They differ with card type, transaction method, industry, and risk.
Can small businesses reduce interchange fees?
Yes, by promoting debit card usage, processing transactions promptly, and adopting secure payment practices.
Are interchange fees negotiable?
The card networks’ rates are not negotiable, yet you can negotiate your processor’s markup.
How frequently are interchange fees adjusted?
These typically change twice a year by the card networks, so it is essential to stay up-to-date.