Interchange is part of the cost you pay to run credit cards at your company. The rate is determined by the card brands, Visa, MasterCard, Discover and American Express. An interchange charge is a fee that goes to the bank that issued your customer’s credit card (like Citi, Chase or Capital One) every time your business accepts a payment. Importantly, it’s a fee that lands with the merchant to pay, not the customer.
Interchange rates vary from purchase to purchase because the card issuer must make an assessment about the risk of fraud each purchase carries. This assessment can depend on a huge number of variables, including your business model, the type of transaction, and the amount of data included in the payment details.
Further adding to the complexity of payment processing fees, Visa, MasterCard, Discover and American Express implement semi-annual changes to Interchange rates every April and October. With this in mind, 2021 will see one of the biggest changes in the past ten years.
The rate increases scheduled for April 2021 by Visa and MasterCard will generate a net $889 million more in annual interchange costs to merchants. Hardest hit will be online merchants, B2B merchants and full-service restaurants. However, all businesses are expected to see a significant impact on the Interchange portion of their credit card processing fees.
To help you offset these historic increases, Merchant Direct will:
Don’t wait until you receive your April merchant statement and are surprised by how much the increases add up. You don’t want that nightmare again!