Interchange is a fee, published in the network's rate schedules, that the acquirer/merchant side effectively pays to the issuer on each card transaction. It's the network's way of compensating the issuer for funding the purchase, taking on cardholder risk, and running the account. In a common pattern, interchange is not a separate wire that someone sends, it's baked into the math of settlement, so the issuer remits the transaction amount minus interchange and the merchant ends up funded net of it. Rates vary widely by card type, merchant category, region, and how the transaction is processed, and the networks publish the schedules. On three-party schemes like American Express, the same company plays issuer and network, so interchange isn't a separate flow there, just internal accounting.
In a flow
Interchange is a money-leg adjustment, not a message and not its own transfer. It changes how much settles between the issuer and acquirer: the issuer typically remits the sale amount less interchange, which is why the merchant is funded net of fees.
Common misconceptions
Myth: Interchange is a separate payment the merchant wires to the issuer.
Reality: It generally isn't sent on its own. Interchange is netted inside settlement, the issuer remits the transaction amount minus interchange, so the merchant simply ends up funded net of it. No standalone interchange transfer happens in the typical flow.
Myth: The card network keeps the interchange fee.
Reality: On the major four-party networks, interchange flows economically to the issuer, not the network. The network sets and publishes the rates and charges its own separate network/assessment fees, but the interchange itself is the issuer's compensation.
Related terms
See it in a guide
Sources
- Visa interchange reimbursement fees ↗ · Visa (operator). Network-published interchange rate schedules.
- Mastercard interchange rates ↗ · Mastercard (operator)
Educational, plain-English explainers. Not legal, compliance, tax, or financial advice. These cover fundamentals, not current fees, limits, or rates (which change). Rails and parties vary by program and country, so verify specifics against primary sources. Last reviewed June 2026.