Interchange - Frequently Asked Questions | Visa.ca
Frequently Asked Questions

How does Visa set interchange?

Interchange is set in response to dynamic and highly competitive market forces and strikes the right economic balance between participants in the payment network. Among other things, it varies by the type of retailer, cost of the sale, payment product type, processing technology the retailer uses and region or country. For example, transactions at fuel retailers, quick service restaurants and car rental agencies each possess unique attributes that may require different interchange categories and processing strategies. Similarly, the type of payment product used (e.g., credit or debit) and how that product is used (e.g., face-to-face or over the Internet) affect the interchange rate and processing requirements.

Who pays interchange?

The retailer's financial institution generally pays interchange. Retailers make a payment to their financial institution for Visa transactions, frequently referred to as a Retailer Discount or Retailer Service fee. This is a market-based fee set by each retailer's financial institution operating in a competitive marketplace — retailers can choose their financial institution in the same way cardholders can choose the financial institution that issues their Visa card. Interchange is only one component of this cost of doing business.

How much is interchange?

Among other things, interchange may vary by the type of retailer, cost of the sale, payment product type, processing technology the retailer uses and region or country. For example, transactions at fuel retailers, quick service restaurants and car rental agencies each possess unique attributes that may require different interchange categories and processing strategies. Similarly, the type of payment product used (e.g., credit or debit) and how that product is used (e.g., face-to-face or over the Internet) affect the interchange rate and processing requirements.

Can retailers negotiate interchange rates?

Retailers do not pay interchange directly. They pay a Retailer Discount or Retailer Service fee that they can actively negotiate directly with their financial institution. Interchange is a mechanism that helps manage a worldwide system made up of thousands of financial institutions, millions of retailers and millions of consumers.

Are retailers suing you over interchange?

In some countries, such as the United States, retailers have chosen to attempt to negotiate their cost of accepting cards through litigation.

Are interchange rates regulated?

In some countries, price controls have been imposed on interchange. Such regulation has only proved to harm consumers. In Australia, where interchange levels are regulated, retailers have increased their profits, while consumers have lost card benefits and choice. Consumers are also paying higher prices due to the check-out fees retailers can now charge.

How much revenue does Visa gain from interchange?

Interchange is the transfer rate paid by the retailer's financial institution to the cardholder's financial institution for the vast majority of transactions. For ABM transactions, interchange flows in the opposite direction, from the cardholder's bank to the acquiring bank. It is part of financial institutions' cost structure.

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