Interchange Fee

The Interchange Fee is the transaction fee paid by the merchant's acquiring bank to the cardholder's issuing bank. It is the largest component of the Merchant Discount Rate (MDR).

Interchange rates are set by card networks (Visa, Mastercard) and vary based on card type (consumer vs. commercial), transaction type (card-present vs. card-not-present), merchant category code (MCC), and region. Optimizing interchange through correct MCC classification, Level II/III data submission, and local acquiring is a key cost-reduction strategy.