The interchange fee is the fee charged to the merchant bank (acquirer) by the credit card issuing bank to cover the cost of converting credit card charges to cash deposits in the merchant’s account. When credit cards are used for a transaction, the issuing bank (cardholder’s bank) pays the acquiring bank for their cardholder’s purchase less the interchange fee for the transaction. The acquiring bank then pays their merchant for the remaining balance minus a markup for processing the transaction. Merchants ultimately receive the gross amount of the sale minus a series of base costs and markups that include interchange fees, assessments and the provider’s markup.
The interchange fee is calculated by the issuing bank’s expenses for authorisation costs and losses due to fraud and credit.
VISA and MasterCard establish interchange fee rates and they are revised on a regular basis, though they usually range from between 1% – 2%. These credit card fees are a primary source of their profits. Interchange fees for the two largest credit card companies may change twice a year: in April and October
Payment Processing Services by NOIRE
NOIRE provides industry leading online payment processing services & risk management technologies. Designed using NOIRE, “Simply Switch On”, approach to payment processing, our payment solutions are built using the latest payment processing technology enabling businesses to “Plug In” and “Switch On” payment modules with ease if and when required.
As a leading Payment Service Provider, you can trust NOIRE to find the right solution for your business. We provide everything in one simple agreement – your Internet Merchant Account, Payment Gateway and Payment Processing with all the leading cards issuers. Combined with NOIRE’s industry leading fraud & risk management solutions, merchants can be confident managing their payments safely and securely from beginning to end with NOIRE.
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