What is the Interchange Fee on your merchant statement?

Network pass-through

Who charges it, and is it a pass-through cost or a markup?

The card-issuing bank (the bank that issued your customer's card, such as Chase or Bank of America) receives interchange, and the rate is set by the card network rules (Visa, Mastercard, Discover, American Express), not by your processor. Your processor collects it from you and forwards it to the issuing bank. Because your processor doesn't set the rate and doesn't keep the money, interchange is a textbook network pass-through cost, not a processor markup, even though it's the biggest line on your bill.

Why some B2B sellers pay less through Level 2 and Level 3 data

Card networks offer reduced interchange rates on business and government purchasing card transactions when the merchant submits extra transaction detail, commonly called Level 2 or Level 3 data: things like a tax amount and a purchase order or customer reference number, and for Level 3, line-item detail similar to what would appear on an itemized invoice. Businesses that sell primarily to other businesses and never submit this additional data are often paying a higher interchange rate than they need to on every qualifying transaction, simply because their payment gateway or terminal isn't configured to capture it. Not every gateway supports this, and not every transaction qualifies, but for a B2B-heavy business processing a meaningful volume of purchasing card transactions, asking whether your gateway supports Level 2 or Level 3 data submission is one of the few ways to legitimately lower your real interchange cost, rather than just negotiating your processor's markup on top of it.

What it typically costs

Interchange rates vary by card type (debit, standard credit, rewards, or premium travel cards all cost differently), how the card was entered (chip, tap, swipe, or manually keyed), and your business's industry classification. There are hundreds of individual interchange categories published by the card networks. As a rough anchor, rates commonly cited as of August 2026 put debit around 1.19%, standard consumer credit around 1.5% to 2.2%, and premium rewards cards at roughly 1.65% plus a small per-transaction amount or higher. Because the rate depends on exactly which cards your customers use and how transactions are entered, your own blended interchange cost is more useful to know than any single published rate.

Can you get rid of it?

No. Interchange is set by the card networks and paid to the issuing bank regardless of which processor you use or how good a deal you negotiate. No processor can legitimately offer to eliminate it, and any pricing quote that implies otherwise is worth questioning closely. What you can influence is what your processor adds on top of interchange, which is where interchange-plus pricing earns its name: you pay real interchange plus one transparent, negotiable markup, instead of a blended rate that hides how much of it is actually interchange versus profit.

What to check on your own statement

1. Look for interchange broken out as its own category on your statement, separate from your processor's markup.
2. If your statement doesn't separate interchange from markup, that's itself worth asking your processor about directly.
3. Check whether your pricing is interchange-plus (transparent) or a blended flat rate (interchange and markup combined into one number).
4. Note what share of your card volume comes from rewards or premium cards, since those carry higher interchange.
5. Be skeptical of any sales pitch claiming they can lower your interchange cost specifically. It's the one part no processor controls.

Frequently asked questions

What is an interchange fee?

The portion of a card transaction paid to the bank that issued the customer's card, set by the card networks based on card type and how the transaction was processed.

Who sets interchange rates?

Visa, Mastercard, Discover, and American Express each publish their own interchange rate schedules. Individual processors don't set these rates.

Can my processor lower my interchange fee?

No processor can change the interchange rate itself. What they can offer is a lower markup on top of it, which is what interchange-plus pricing is designed to make visible.

Why does interchange vary between transactions?

It depends on the type of card used, how it was entered (chip, tap, swipe, or keyed), and your business's merchant category code, among other factors set by the card networks.

Why do rewards cards cost more to accept than a regular debit card?

Card networks set higher interchange on rewards and premium cards because a portion of that interchange funds the rewards, points, or cash back the cardholder earns. A basic debit card carries little to no such cost, since there's no rewards program behind it, so its interchange rate is set much lower, often with its own separate, capped fee structure under federal debit rules. That difference is entirely on the card-issuing side and has nothing to do with your processor, which is why no processor can offer a lower rate specifically on rewards card transactions.