You've heard the word “interchange” thrown around. Maybe your processor mentioned it. Maybe you saw it on your statement. But what actually is it?
Here's the 2-minute version.
Interchange = The Wholesale Cost
Every time a customer pays with a Visa or Mastercard, the card-issuing bank (Chase, Bank of America, Capital One, etc.) charges a fee. That fee is interchange. Think of it like the wholesale cost of processing a transaction.
Visa and Mastercard set these rates, and every processor in the world pays them. Your processor can't negotiate interchange down — it's the same for everyone.
How Much Is Interchange?
It varies by card type, business type, and how the card is processed:
Debit cards: ~0.5–1.0% (cheapest)
Standard credit: ~1.5–1.8%
Rewards credit: ~1.8–2.3%
Corporate/business cards: ~2.3–2.8% (most expensive)
Card-present (swiped/dipped) is always cheaper than card-not-present (keyed in or online).
Why This Matters to You
If your processor uses flat-rate pricing, you pay the same rate regardless of the card type. That means on a debit card transaction (interchange ~0.8%), you're paying 2.6% — giving your processor a massive margin.
With interchange-plus, you pay the actual interchange rate plus a small fixed markup. Debit cards cost less. Rewards cards cost more. But on average, you save 15–30% compared to flat rate.
At PAYHERO, we pass interchange through at cost — no inflation, no padding. See what that looks like for your business.