What is an interchange fee?
Every tap of a card triggers a small payment you never see. It flows from the shop's side of the deal to the bank that gave you the card.
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An interchange fee is a fee paid on each card transaction to the bank that issued the card. It is paid from the merchant's side, via its bank (the acquirer). Card networks set rates; the US caps large banks' debit fees and the EU caps consumer card fees.
Who pays the interchange fee, and to whom?
US Regulation II defines the interchange transaction fee as a fee set, charged or received by a payment card network and paid by a merchant or an acquirer to compensate the card issuer for its part in a debit transaction. The EU's interchange regulation describes it as a fee paid for each transaction, directly or through a third party, between the issuer and the acquirer. In short: the money moves from the shop's side to the cardholder's bank. The full chain of a card payment is in how card payments work.
How much is an interchange fee?
It depends on card type, country and network. Two places publish hard caps:
| Rule | Applies to | Maximum |
|---|---|---|
| US Regulation II | Debit cards from issuers with $10 billion or more in assets | 21 cents + 0.05% of the value, plus up to 1 cent for fraud prevention |
| EU Regulation 2015/751 | Debit card payments | 0.2% of the value |
| EU Regulation 2015/751 | Credit card payments | 0.3% of the value |
Why do regulators cap interchange fees?
The Federal Reserve describes Regulation II's goal as keeping debit interchange fees reasonable and proportional to the issuer's costs; smaller issuers are exempt. The cap has stood since 2011. In October 2023 the Fed proposed cutting it so that the fee on a $50 transaction would fall from 24.5 to 17.7 cents and be updated every two years; as of October 2026 the official regulation text still shows the original cap. US credit card interchange is not capped by Regulation II. Payment systems that skip cards altogether are covered in instant payment systems.
Questions readers ask
Does the cardholder pay the interchange fee?
Not directly. Under both the US and EU definitions it is paid between the merchant's side and the issuer. How much of that cost shows up in shop prices is a separate debate.
Is the interchange fee the whole cost to a merchant?
No. Acquirers and networks add their own charges on top. Interchange is one component of what merchants pay to accept cards; see what is fintech for how new payment firms package these costs.
Interchange is the slice of every card payment that goes to the card's issuer. In the US, large banks' debit fees are capped by Regulation II; in the EU, consumer debit and credit fees are capped as a percentage. Everything else depends on network rate tables. For newer ways to pay, read what is fintech.
Sources
- Electronic Code of Federal Regulations (Federal Reserve Board), 12 CFR Part 235 — Debit Card Interchange Fees and Routing (Regulation II) (2026)Primary source
- Board of Governors of the Federal Reserve System, Federal Reserve Board requests comment on proposal to lower debit card interchange fee cap (2023)Primary source
- EUR-Lex, Official Journal of the European Union, Regulation (EU) 2015/751 on interchange fees for card-based payment transactions (2015)Primary source
- Board of Governors of the Federal Reserve System, Regulation II (Debit Card Interchange Fees and Routing) (2024)Primary source
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