What is interchange, in one sentence?
Interchange is the fee the card networks set that goes to the bank that issued your customer's card. Every processor pays it, and it is the same for everyone. What differs is how much the processor adds on top.
Who sets interchange?
Visa, Mastercard, Discover, and American Express publish interchange tables and update them, usually in April and October. Your processor does not control interchange, and neither do you.
Why is interchange different for different cards?
A debit card costs far less than a premium rewards credit card. The rewards on that card are funded by interchange. A business that mostly sees debit cards has a much lower true cost than one that mostly sees airline-miles cards.
What is interchange-plus pricing?
A pricing model where you pay the real interchange for each transaction, plus one fixed, disclosed markup from the processor. You can see the two parts on your statement. It is the wholesale way to buy processing.
Why does flat-rate pricing exist then?
Simplicity. A single 2.9% number is easy to understand. But it is set high enough to cover the most expensive cards, so on every cheap debit transaction you overpay, sometimes by more than a full percentage point.
Can I negotiate interchange?
No. You can only negotiate the markup on top of it, and you can change the mix of transactions you accept (tapped versus keyed, ACH for large invoices) to land in cheaper categories.
How do I see my interchange?
Ask your processor for an interchange-plus statement, or text a photo of your current statement to 580-910-9100 and Zend Blue will break it out for you and show your true wholesale cost.
A worked example: two $100 sales
A customer taps a basic debit card: interchange might be about 0.05% + 21¢, roughly 26 cents. Another customer uses a premium travel rewards card: interchange could be 2.4% + 10¢, about $2.50. Same product, same price, ten times the cost, and on a flat 2.9% plan you were charged $3.20 on both.
That gap is exactly what interchange-plus captures. You pay 26 cents plus a small markup on the first sale instead of $3.20.
Common interchange categories you will see
- Debit (regulated) — the cheapest, from big banks
- Debit (unregulated) — small banks and credit unions, a bit higher
- Credit, basic — standard consumer credit
- Credit, rewards / premium — the expensive ones that fund points
- Corporate / commercial — business cards, often highest
- Card-not-present — keyed or online, higher than tapped for the same card
Mistakes to avoid
- Comparing processors by their "rate" instead of their markup over interchange
- Assuming a lower headline rate means a lower bill
- Keying in cards that could have been tapped
- Not offering ACH for large tickets, where interchange does not even apply
The short version
Interchange is the wholesale cost, set by the networks, paid to the bank. Buy it at cost with a transparent markup, steer transactions into cheaper categories, and use ACH where cards are expensive. That is the whole game.