What interchange is, and why every quote sits on top of it.

Three parties, not two

When a customer taps a card, the money moves through three businesses before it reaches you.

• The issuing bank gave your customer the card and carries the risk that they do not pay their bill. It takes interchange.
• The card network — Visa, Mastercard, Discover, American Express — runs the rails. It takes assessments and a handful of network fees.
• Your processor connects you to all of it. It takes markup.

Interchange is by far the largest of the three, and it is the only one you can look up.

It is published, and it is the same for everyone

Visa and Mastercard publish their US interchange tables openly, usually updated twice a year. A card in a given category costs the same to accept whether you are a corner shop or a national chain — the published rate depends on the card and the transaction, not on how good a negotiator you are.

What varies is which row of the table your transaction lands in. That depends on things like:

• The card itself. A basic consumer debit card is cheap. A premium rewards credit card is expensive, because somebody has to fund the points. A corporate card is more expensive still.
• How the card was presented. Tapped or inserted in person is the cheapest. Keyed in by hand, or taken over the phone, is dearer, because the risk of fraud is higher.
• What data you sent. Some categories require fields like a customer address or an invoice number to qualify for the better rate. Missing them moves the transaction up a tier.
• What kind of business you are. Supermarkets, fuel stations, charities and a few other categories have their own tables.

This is why a processor cannot honestly promise you a single flat percentage and a cheap one. Either they are averaging across your mix and taking the risk, or they are quoting you the cheapest row and letting the rest surprise you later.

Why your effective rate moves on its own

Nothing about your pricing has to change for your bill to change. If one month brings more rewards cards, more phone orders, or more business customers, your interchange rises with it.

That is worth internalising before you compare two months of your own statements and conclude somebody raised your rate. Sometimes they did. Often the card mix did it.

What this means for comparing quotes

Once you know interchange is fixed, a quote has only one variable worth examining: what the processor adds on top.

That reframes the whole exercise. “2.6% and 10 cents” tells you nothing, because you cannot see where interchange ends and the processor begins. “Interchange plus 0.50% and 10 cents” tells you exactly what the processor is paid, and lets you compare it with anyone else’s number directly.

Every other difference between providers — support, hardware, how quickly you are funded, whether there is a contract — is real and worth weighing. But on price, interchange is the floor, and the markup is the whole negotiation.

What we charge

Interchange + 0.50% + 10¢ in person, interchange + 0.75% + 25¢ keyed. No contract, no monthly fee, no PCI fee. The interchange part is whatever Visa and Mastercard publish — we pass it through at cost, because there is no other way to pass it through.