Interchange Fees account for the most of payment processing costs and are established directly by the Card Networks. They function as to reimburse the Issuer for the value and benefits that Merchants receive when they accept electronic payments.
Historically, Interchange Fees were developed with the aim of reimbursing the Issuers for the lost interest due to executed transaction when money held within Issuers accounts were sent to the Acquirer. Because of this reason, Visa still calls them “interchange reimbursement fees”.
Nowadays, Interchange Fees amount depends on the following factors:
1. Processing method- whether during transaction card is present or it is carried out through the Internet.
2. Transaction data- the information supplied with a Credit card transaction impacts how it qualifies at interchange.
3. Merchant Category Code- specific interchange categories exist for businesses that fall under a certain merchant type.
5. Card brand- this factor typically is associated with credit cards that yield some bonus for the Cardholder.
6. Card owner- whether the person owing a card is a individual, business or a company.