Interchange fee

What it means

An interchange fee is what the merchant's bank, the acquirer, pays the bank that issued the card when a customer pays by card. The merchant does not see it directly, but it is built into the total fee that its bank or payment gateway charges for card acquiring.

In the EU, interchange on consumer cards is regulated by the Interchange Fee Regulation. The cap is 0.2% of the transaction value for debit cards and 0.3% for credit cards. Commercial cards and cards issued outside the EU are not covered by these caps.

The merchant's total fee, the merchant service charge, has three parts: interchange for the issuer, scheme fees for networks such as Visa or Mastercard, and the acquirer's margin. Interchange is only one component of the price, although for regulated cards it tends to be the most predictable one.

How it works in practice

When choosing a provider, compare pricing models. With a blended rate the merchant pays the same percentage for every card, while interchange plus plus shows interchange, scheme fees and margin separately in the statement, which is more transparent at higher volumes.

The share of commercial and foreign cards has a big effect on cost. An online shop selling to businesses or to tourists from third countries will pay more for its terminal or gateway than the regulated caps suggest, so track the actual average rate, not just the advertised one.

In the books, card acceptance fees are bank charges. The bank usually deducts them from the amount it credits, so sales and fees must be booked gross and separately, not just the net receipt. Otherwise sales recorded in eKasa will not match the amount on the account.

What to watch out for

Merchants in the EU may not add a surcharge for paying with a consumer card, because the payment services directive PSD2 bans surcharging on regulated cards. Higher card costs therefore have to be reflected in product prices rather than added at the checkout.

Interchange does not cover the risk of disputed payments. In a chargeback the bank can reclaim the amount from the merchant along with a dispute handling fee. Keep proof of delivery and the terms of sale so that disputes can be defended successfully.