Understanding Interchange

Find out what interchange is and how it contributes to a fair and balanced payments system

What is interchange?

Interchange is a small fee paid by a merchant's bank (acquirer) to a cardholder's bank (issuer) to compensate the issuer for the value and benefits that merchants receive when they accept electronic payments. It enables banks that issue electronic payments to deliver tremendous value to merchants, governments and consumers.

Our role 

Mastercard does not earn revenue from interchange.

Where not fully regulated by the government, Mastercard sets interchange rates based on the value delivered by the issuing bank and the benefits of accepting electronic payments. Setting interchange at the right level is important because if interchange rates are set too high, merchants may choose not to accept cards; and, if interchange is set too low, issuing banks have no incentive to cover the risks of issuing payment cards.

Setting interchange rates at the appropriate level also helps ensure that both issuers and acquirers deliver services that optimize the effectiveness of the payments system and spur development of innovative payment solutions. 

Flexible interchange rates make it possible for electronic payments to deliver maximum value at the lowest cost for both merchants and consumers. Interchange also promotes credit availability for small businesses and is a key driver for financial inclusion when set at the optimal level.

The benefits that interchange delivers to all parties

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Consumers derive significant value from electronic payments including convenience and safety when they make a purchase, increased opportunity for financial inclusion, access to rewards or incentives and the choice of thousands of debit, credit and prepaid payment products.

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Merchants benefit from guaranteed payment; increased sales; fraud protection; lower processing costs than those associated with other forms of payment such as cheques and cash; and the ability to attract and retain customers with a fast, efficient buying experience.

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By receiving interchange fees from the merchant’s bank, issuers are able to bear the risks and costs associated with extending electronic payments to their customers.

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Governments experience significant efficiencies and promote financial inclusion for their citizens when they choose to distribute social benefits and other programs via electronic payments.

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Electronic payments are often the point of entry for new consumers to a formal financial ecosystem. By incentivizing issuers to create innovative payment programs, interchange helps encourage financial inclusion for consumers who could not otherwise participate.

What you need to know

Learn more about interchange and the benefits of the system it helps support through the following resources