What are card brand fees? A Detailed Guide to Interchange Rates

ByMarkl Harries

Card brand fees are the fees charged by credit card companies, such as Visa and Mastercard, to banks for processing credit and debit card transactions. These fees are also known as interchange rates.

Interchange rates are set by the card brands and typically range from 1% to 3% of the transaction amount. The actual rate that a merchant pays will depend on a number of factors, including the type of card being used (e.g., credit or debit), the cardholder’s country of residence, and the merchant’s acceptance policies.

In addition to interchange rates, merchants also pay a separate fee, known as a merchant service charge (MSC), to their acquirer (the bank that processes card payments on their behalf). MSCs typically range from 1.5% to 3.5% of the transaction amount, depending on the acquirer and the type of card being used.

Card brand fees are just one part of the overall costs of accepting credit and debit cards. Merchants should also be aware of other fees, such as acquirer fees, network fees, and processor fees.

The following is a more detailed breakdown of interchange rates:

  • Visa credit card interchange rates range from 1.51% to 2.61% + $0.05 per transaction.
  • Mastercard credit card interchange rates range from 1.55% to 2.6% + $0.05 per transaction.
  • Discover credit card interchange rates are 1.56% + $0.10 per transaction.
  • American Express credit card interchange rates are 2.5% + $0.10 per transaction.
  • Diners Club credit card interchange rates are 3.5% + $0.10 per transaction.
  • JCB credit card interchange rates are 2.75% + $0.10 per transaction.
  • UnionPay credit card interchange rates are 1.65% + $0.05 per transaction.
  • Visa debit card interchange rates range from 0.05% to 0.95% + $0.22 per transaction.
  • Mastercard debit card interchange rates range from 0.05% to 1.15% + $0.22 per transaction.

As you can see, card brand fees can vary significantly depending on the type of card being used and the cardholder’s country of residence. Merchants should check with their acquirer to get an estimate of the interchange rates they will be charged for each type of card they accept.

Merchants should also be aware that they may be required to pay chargebacks, which are fees charged by the card issuer when a customer disputes a charge. Chargebacks can range from $5 to $100 per occurrence and are typically assessed on a per-transaction basis.

The best way to avoid paying high card brand fees is to accept only the types of cards that you can afford to process. For example, if you are a small business owner, you may want to consider accepting only Visa and Mastercard credit cards, as they have the lowest interchange rates.

Another way to save on card brand fees is to negotiate with your acquirer. Many acquirers are willing to offer lower rates to merchants who process a high volume of transactions.

Finally, you can use a third-party payment processor, such as Stripe or Braintree, which can help you save on card brand fees by passing the savings on to you in the form of lower processing rates.

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