Interchange

Interchange facilitates the acceptance of payment card payments for businesses by establishing connections with card networks and issuing banks. When a customer opts to pay with their payment card for a product or service, the merchant incurs an interchange fee from their card network. This fee serves as compensation for the card network, the issuing bank, and any other entities engaged in the transaction. The purpose of the interchange fee is to cover the costs associated with processing and settling the payment.

Interchange fees are typically expressed as a percentage of the transaction value or a flat fee per transaction and vary based on factors such as the type of payment card (credit or debit), the nature of the transaction (in-person or online), and the industry of the merchant. While merchants bear the ultimate cost of interchange fees, they indirectly influence pricing strategies and impact the overall dynamics of electronic payment transactions.