Interchange: What makes credit cards work?

Author: Amy Volk | Posted: 2/11/2014
Interchange - the fee paid to banks or debit networks - and how to minimize their impact

Interchange is at the heart of what makes credit cards possible. It refers to the way transactions are exchanged between merchant acquirers or merchant processors and card issuers or debit networks. Specifically, it is the fee that merchants pay the issuing banks or debit network to accept credit cards. These fees are passed through the merchant acquirer to the banks or networks.

Interchange is a simple process, governed by not-so-simple rules. When merchants settle their transactions each day, Elavon's network routes them to the respective Card Associations (Visa, MasterCard, Discover) and debit networks, who establish the rules and manage the actual interchange of all transactions. Every transaction is assigned an Interchange Category based on card type (credit, debit, rewards, purchasing) industry type (retail, e-commerce, etc.) and qualification elements (swiped card, key entered, etc).


Source: Elavon