Understanding Interchange

The credit card payment network delivers immense value to all constituents in the payments chain. This complex financial system enables any bank in the world to link its customers (both businesses and credit card carrying consumers) with those of any other bank to transact business almost instantaneously.

Interchange is a fee paid by a merchant's bank (also known as the Acquiring Bank) to the cardholder's bank (the Issuing Bank) to compensate the Issuing Bank for a portion of the risks and costs it incurs. Below is a diagram to help illustrate the Interchange process further:


Interchange fees are determined by the payment Card Associations, (i.e. Visa, MasterCard, etc.). The rate that you pay for a transaction varies depending on type of card, (i.e., debit, credit, rewards card, etc.) and the type of transaction, (i.e., if the card is present, a phone or Internet order, etc.). The fee charged is also tied to the level of risk for that transaction; the lower the risk, the lower the rate. So for example, a transaction conducted with a card that is present and can be swiped on a terminal is a lower risk and fee than a card-not-present transaction.

In addition to interchange fees, the individual payment brands may charge a separate assessment fee, which covers the operating costs of managing their network.

If you have any questions about any of the fees that appear on your CMS monthly statement, please call our customer support number 877-267-4324 (option 2).

Article ID: 36000106355