Interchange
Interchange is the fee, set by the card networks and paid to the cardholder's issuing bank, that a merchant's acquirer owes on every card transaction and passes through as the largest component of processing cost.
Interchange is the wholesale cost of card acceptance. Visa and Mastercard publish schedules with hundreds of rate categories, and the applicable rate depends on the card type (debit versus credit, standard versus rewards versus commercial), how the transaction is captured (card-present versus card-not-present), the merchant’s MCC, and the data submitted with the transaction. The money flows from the merchant’s acquirer to the cardholder’s issuer; the processor does not keep it.
How it works, with real numbers
Rates are typically a percentage plus a fixed fee. Regulated debit (cards issued by US banks over $10 billion in assets, capped by the Durbin amendment) costs 0.05% plus $0.21 (plus a small fraud adjustment). A swiped or dipped consumer credit card at a retail merchant might fall around 1.5–1.8% plus $0.10, while a keyed or eCommerce transaction on a premium rewards card can exceed 2.5% plus $0.10. On a $100 online sale with a rewards credit card, interchange alone can approach $2.30 before network fees or processor markup. Transactions that miss the data requirements of their best-available category “downgrade” to a more expensive one.
Why it matters
Because interchange is the same wholesale cost for every processor, the real differences between providers are the markup on top of it and how honestly that markup is disclosed. Flat-rate pricing bundles interchange and markup into one number, which is simple but hides how much of the rate is margin. Interchange-plus pricing passes interchange through at cost and states the markup separately.
QorPay prices on an interchange-plus basis, so partners and their merchants see interchange at cost with the markup broken out.