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Interchange Fees

The moment you set up a merchant account and begin accepting credit cards, you can expect to pay any number of charges, including:

  • Monthly or annual fees
  • Terminal or payment gateway fees
  • PCI compliance fees

In fact, the list is seemingly endless.  

However, very few charges on your monthly statement will capture your attention more than interchange fees. Averaging anywhere from 1 to 3 percent of every purchase, interchange fees are the most expensive component on your itemized list of charges. It's not uncommon for these fees to represent 90 percent of merchant account expenses.

Yet what exactly are interchange fees and how do they work?

Interchange Fees Defined

Also known as "wholesale" or "base" fees, interchange rates are what your Visa and MasterCard acquiring bank pays to the card-issuing bank whenever customers purchase products and goods within your store with their credit card. Of course, your merchant account provider passes those charges to you.  

It's probably best to think of interchange fees as the cost of accepting credit cards.

An item that might retail for $100 nets you at $97 to $99 after you've paid the interchange fee. This, of course, assumes that you sold that item via credit card instead of cash or check.

Though why would you ever voluntarily forfeit up to 3 percent of every purchase?


Although using cash allows you to keep 100 percent of everything you sell, displaying the Visa, MasterCard,Discover, and American Express logos in your window or e-commerce shopping cart will bring you more traffic and sales. In addition, studies have shown that people spend more when they can pay with a credit card; increasing the size of your average transaction.  Another benefit of credit card acceptance is that the funds are automatically deposited into your bank account.  Saving you a trip to the bank!

Are All Interchange Fees the Same?

Not at all.  I Interchange fees aren’t negotiable. They’re set by the card brands and remain fixed throughout the industry.  

However, there are a few variables that can push interchange fees above or below the 1- to 3-percent industry average:  

  • When selling goods online or via telephone, it's harder to verify the authenticity of every purchase. To compensate for this risk, the card brands typically charge higher interchange fees for these card-not-present transactions.
  • Rewards cards also carry higher fees. This is because the card issuers must pay for frequent flyer miles and other perks directly to the consumer.  The cost of these "reward points" ultimately get passed to your acquiring bank/ merchant account provider and on to you.
  • Level 1 credit card processing is more expensive than Levels 2 and 3.  This is because each successive level requires more data on the transaction. Level 2 and Level 3 interchange is designed for business-to-business transactions that typically have a much higher transaction amount.  If you frequently sell to other businesses or government agencies, Level 3 processing offers some of the lowest interchange fees in the industry while passing line item detail on every transaction.
  • Larger processing volume merchants can negotiate volume discounts on their total monthly fees.

How Competitive Are BluePay's Interchange Fees?

All wholesale interchange costs are the same no matter who you choose to have your merchant account with.

However, at BluePay, we are a tier 1 merchant acquirer serving over 40,000 merchants and 350 integrated partners.  We offer some of the most cost effective pricing programs on the market today including product bundles to simplify your costs.  Our wholesale rates are as low as 0.05% for swiped debit card transactions within physical retail environments.

Additionally, we’re able to offer these highly competitive rates while still providing you with industry-leading protection that adheres to the strictest PCI security standards.

To learn more about credit card processing at BluePay, contact our payment support team today.

Welcome to the BluePay Blog!

Whether you're a small business, an enterprise corporation, a financial institution, or a software partner, we have created a series of blog posts to help you and your customers, learn more about the complex nature of payments. Take a look to learn how payments can help to simplify your business operation, and may even help to grow your revenue.

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