What is Interchange Fee?

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Accepted Answer

An **Interchange Fee** is a transaction fee that a merchant's bank (the acquirer) pays to the cardholder's bank (the issuer) every time a customer uses a credit or debit card to make a purchase, representing the largest component of the total merchant discount rate. These fees are set by card networks like Visa and Mastercard and are intended to cover the issuer's costs, including fraud loss, processing, and funding the rewards programs that incentivize card usage.

Interchange Fee

What is Interchange Fee?

What is the primary function of the Interchange Fee and how does its structure vary globally?

How did the Durbin Amendment regulate debit card Interchange Fees in the U.S. and what were the consequences?

What is the financial impact of Interchange Fees on merchants and what strategies are used to mitigate these costs?

What technological and regulatory trends are poised to disrupt or alter the traditional Interchange Fee model?

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