Interchange pricing is a model to determine the fees that merchants pay to credit card companies and banks for processing transactions.
It is a standardized fee system that includes a cover fee plus a percentage of the transaction amount. The fees are set by the credit card companies and banks which remains for all payment processors.
Interchange pricing’s main purpose is to make payment processing fees more transparent and consistent for merchants.
The interchange rate is the hidden underlay expenses of a transaction, consisting of both the interchange rate and card network fees. It is a variable cost that reflects the wholesale cost of transaction.
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