{"head":{"title":"What Is an Interchange Fee? Card Payments Explained","description":"Interchange is the fee the merchant's bank pays the card issuer on each card payment. How it is set, where it is capped, and what it means for a build.","canonical":"https://oceanlab.in/glossary/interchange"},"crumbs":[{"name":"Home","path":"/"},{"name":"Glossary","path":"/glossary"},{"name":"interchange","path":"/glossary/interchange"}],"slug":"interchange","term":"Interchange fee","aka":["interchange","interchange rate"],"category":"Payments and fintech","short":"The fee the merchant's bank pays the card-issuing bank on each card payment, usually the largest part of what a merchant pays to accept cards.","body":[["When a customer pays by card, the merchant's bank (the acquirer) pays a fee to the bank that issued the card. Card networks such as Visa and Mastercard publish the rate tables. Rates depend on things like card type, debit or credit, the country, the merchant category and whether the card was present."],["Some places cap interchange by law. In the US, the Federal Reserve's Regulation II limits debit card interchange for large issuers, with certain small issuers exempt. The merchant does not usually pay interchange directly. It is built into what the payment provider charges."]],"why":["Interchange sets the floor on card costs, so it shapes pricing for marketplaces, subscription products and fintech apps. Some products, such as card issuing programmes, earn a share of interchange, which makes it revenue rather than cost."],"example":["A marketplace compares a flat-rate payment provider with one that passes through interchange plus a fixed markup. Most of its sales are on debit cards, where interchange is low, so the pass-through pricing comes out cheaper at its volume."],"inBuild":["We store the fee breakdown each payment provider returns for every charge, not just the total, so finance can reconcile and compare providers. Fee logic lives in one place, and card data stays with the provider to keep ",{"href":"/glossary/cardholder-data-environment","text":"PCI scope"}," small."],"mistakes":[["Modelling card costs as one flat percentage when most of the cost varies by card."],["Confusing interchange with the provider's markup when comparing quotes."],["Ignoring cross-border and premium card rates when selling abroad."]],"related":[{"href":"/glossary/cardholder-data-environment","label":"Cardholder data environment (CDE)","detail":"The people, processes and systems that store, process or transmit payment card data, plus the systems connected to them."},{"href":"/glossary/webhook","label":"Webhook","detail":"An HTTP request one system sends to a URL you choose as soon as an event happens, so you do not have to keep asking."},{"href":"/glossary/idempotency","label":"Idempotency","detail":"The property of an operation that has the same effect whether it runs once or several times, so it is safe to retry."},{"href":"/glossary/total-cost-of-ownership","label":"Total cost of ownership (TCO)","detail":"Everything a piece of software costs over its life, not just the price to build or buy it."},{"href":"/glossary/headless-commerce","label":"Headless commerce","detail":"An e-commerce setup where the shop front (the head) is built separately from the commerce engine that handles products, carts and orders, linked by APIs."}],"tools":[{"href":"/tools/payment-processing-fee-calculator","label":"Payment processing fee calculator","detail":"Free tool"},{"href":"/tools/fintech-app-cost","label":"Fintech app cost","detail":"Free tool"}],"links":[{"href":"/software/payments","label":"Software for payments","detail":"Payment systems and the compliance work they bring."},{"href":"/pricing/categories/payments","label":"Payments pricing","detail":"Payment provider fees, with sources."},{"href":"/compliance/pci-dss","label":"PCI DSS guide","detail":"Card data rules and how to shrink your scope."}],"sources":[{"title":"Federal Reserve, Regulation II (Debit Card Interchange Fees and Routing)","url":"https://www.federalreserve.gov/paymentsystems/regii-about.htm","checkedAt":"2026-10-25"}],"legal":true,"updatedAt":"2026-10-25"}