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Interchange Explained

What is interchange?

Interchange is a small fee paid by a merchant's acquirer to a cardholder's bank (issuer) to compensate the issuer for the benefits merchants receive when they accept electronic payments.

For a full breakdown of each of the card schemes Interchange Fees, please refer to:

Visa Interchange Fees

Mastercard Interchange Fees

What is an Interchange Plus Plus fee structure?

At CashFlows we price using an Interchange Plus Plus fee structure. Interchange Plus Plus pricing works by adding a constant, flat margin on top of Interchange and Scheme Fees. So typically, Interchange Plus Plus pricing will also be written in the three component format, with a percentage fee and per-transaction fee above Interchange and Scheme Fees. This allows us to provide a clear pricing plan that displays the margin we charge and how it remains consistent when you process different types of cards and transactions.

Understanding the costs

To fully understand the cost of a sales transaction you will need to know how the Merchant Service Charge in broken down into its cost components:

  • Interchange: Fee that the customer's issuing bank charges CashFlows as the acquirer
  • Scheme fee: Fee charged to CashFlows as the acquirer for using the card schemes network. Further details of our scheme fees
  • Processing cost: A fixed percentage and/or pence per transaction paid to CashFlows for the processing of the transaction, covering auxiliary scheme costs, providing customer service, risk management, integration assistance etc.

In this example, lets take a £100 sale where the customer is paying with a Visa Debit Card, they have securely authenticated themselves and their card is issued from the same country as yourself.

CARD TYPE INTERCHANGE SCHEME FEE PROCESSING COST MERCHANT SERVICE CHARGE
Secure Consumer Debit Card 0.21 GBP 0.04 GBP 0.30 GBP 0.55 GBP