Interchange Fees Explained: What Every Merchant Needs to Know in 2026

What exactly is interchange?

Interchange is the wholesale fee component in every card transaction. It flows from the acquiring bank (your processor's bank) to the issuing bank (your customer's card-issuing bank). Visa and Mastercard publish these rates in tables that update twice a year — typically in April and October.

According to the Federal Reserve's 2023 Payments Study, the weighted-average interchange fee for general-purpose card transactions in the U.S. was approximately 24 basis points for debit transactions. Credit card interchange runs significantly higher, typically ranging from 1.5% to over 3% depending on the card program, entry method, and merchant category.

Interchange is not negotiable. It is set by the card networks. What you negotiate with your processor is everything above interchange.

What are network assessments?

On top of interchange, Visa and Mastercard charge assessment fees — small percentages applied to your monthly volume. These cover the networks' operating costs. As of 2026, assessment rates are typically a few basis points and are published on Visa's interchange page and Mastercard's interchange page.

Like interchange, assessments are non-negotiable. They appear on your statement either as passthrough line items or bundled into your blended rate.

What is your processor's markup?

This is the only negotiable component of your processing cost. It includes:

• Basis-point markup over interchange: e.g., interchange + 0.20% + $0.10 per transaction
• Monthly fees: gateway access, PCI compliance, account maintenance, statement fees
• Incidental fees: chargebacks, retrievals, batch processing, early termination

When comparing quotes, focus on the effective rate — total fees for the month divided by total volume processed. This single number normalizes across pricing models and lets you compare interchange-plus processors like Kurv against flat-rate models like Square fairly.

How do you read a processing statement?

A typical interchange-plus statement shows three cost layers:

1. Interchange detail: Line items per card type (e.g., Visa CPS Retail Credit, MC Merit III Debit)
2. Assessment detail: Network fees from Visa, Mastercard, Discover, American Express
3. Processor margin: The markup your processor charges above the first two layers

If your statement bundles everything into one rate with no breakdown, you are on blended pricing and cannot audit where your money goes. This is the core tradeoff between aggregators like Square and interchange-plus processors.

Why does card type matter so much?

Not all cards cost the same to accept. Rewards cards carry higher interchange than basic debit because the issuing bank funds those rewards from interchange revenue. The Durbin Amendment capped debit interchange for banks with assets above $10 billion, but credit cards and exempt small-issuer debit cards remain unregulated on interchange.

This means your card mix — the ratio of debit, standard credit, rewards credit, and corporate cards — directly impacts your effective rate. A restaurant that sees mostly debit will pay less interchange than a B2B contractor that processes corporate cards.

How do you compare two processing quotes?

Follow this framework:

1. Request the same pricing model from both processors (interchange-plus vs. interchange-plus, or blended vs. blended)
2. Provide your last 3 months of statements so the processor can quote against your actual card mix
3. Calculate the effective rate for each quote: total proposed monthly fees ÷ total monthly volume
4. Check for hidden fees: PCI non-compliance, annual fees, early termination, statement fees
5. Compare contract terms: Length, auto-renewal clauses, rate guarantee periods

If you are switching processors, our how to switch payment processors guide covers the operational checklist.

What trends are shaping interchange in 2026?

Several regulatory and market dynamics are in play:

• The Credit Card Competition Act (proposed federal legislation) would require large card-issuing banks to offer at least two network routing options, potentially creating interchange competition
• Visa and Mastercard agreed to a $30 billion interchange fee settlement in 2024, though its final terms and merchant impact remain uncertain as of this writing
• Real-time payments (FedNow, RTP) offer alternative rails that bypass card interchange entirely for certain use cases

Processor Report will update this guide as rule changes take effect. Bookmark this page and check back quarterly.

For processor-specific comparisons, see Kurv vs Square or browse the national rankings.