An interchange fee is the share of a card payment that the merchant's bank pays to the card issuer, and it is what funds points programmes.
An interchange fee is the share of a card payment that the merchant’s bank pays to the card issuer, and it is what funds points programmes.
Also called: Interchange.
How it works#
This fee is the money that pays for points, miles and card benefits. Because it is capped by law in Europe and not in some other markets, earning rates and welcome bonuses there are markedly richer. Understanding where points come from also explains why certain merchant categories earn less and why some payments earn nothing at all.
Not to be confused with#
An interchange fee is not the same as a surcharge at the till: interchange moves invisibly between banks, while a surcharge is added visibly to what the customer pays.
In German#
The German term is Interbankenentgelt. German version of this term
Related terms#
- Merchant category code: A merchant category code is the four-digit code a card network uses to classify a business, and it decides which bonus points a purchase earns.
- Bonus category: A bonus category is an area of spending where a card credits more points per unit of spend than its base rate, such as travel or restaurants.
- Shopping portal: A shopping portal is a programme-run page used to start an online purchase so that points are credited on top of what the card itself earns.
Articles that use this term#
TopicEvery article and term onCards and money.