What is an interchange fee?

What is an interchange fee?

• A. Fee paid to the issuing bank.
• B. Fee charged by the card networks.
• C. Fee collected by the acquirer.
• D. Fee charged by the merchant.

Answer: (A)

Interchange fees are the charges that flow from the merchant’s bank (the acquirer) to the bank that issued the card. When a card payment is processed, the issuing bank is compensated for the transaction through the interchange, which is set by the card networks (like Visa or Mastercard). The acquirer passes this fee to the issuer as part of the processing charges, while the merchant ultimately pays the total cost including interchange plus network assessments and the processor’s own fee. So the essence is that the fee goes to the issuing bank, which is why this option is the best fit.

Interchange fees are the charges that flow from the merchant’s bank (the acquirer) to the bank that issued the card. When a card payment is processed, the issuing bank is compensated for the transaction through the interchange, which is set by the card networks (like Visa or Mastercard). The acquirer passes this fee to the issuer as part of the processing charges, while the merchant ultimately pays the total cost including interchange plus network assessments and the processor’s own fee. So the essence is that the fee goes to the issuing bank, which is why this option is the best fit.