Interchange fee
An interchange fee is the portion of a card transaction fee that the merchant’s payment provider pays to the bank that issued the customer’s card. In the UK it is capped by law at 0.2% for consumer debit cards and 0.3% for consumer credit cards.
Every card payment splits into three parts. Interchange goes to the card issuer, scheme fees go to Visa or Mastercard, and the remainder is the acquirer’s or provider’s margin.
Because interchange is capped on UK consumer cards, it sets a hard floor under what anyone can charge you. No provider can price below interchange plus scheme fees and survive, which is why headline rates across the market cluster where they do.
Commercial cards, corporate cards and cards issued outside the UK are not covered by the cap, and can carry interchange several times higher. This is why some providers quote a low headline rate and then add a surcharge on business or international cards.
Why it matters to you
If a provider quotes you a rate well below about 1%, check what happens on commercial and non-UK cards. That’s usually where the difference reappears.
Work out what you’re actually paying.
Whatever your statement calls it, the only figure that matters is total cost divided by total takings. Our calculator works that out from your own numbers.
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