A MasterCard interchange table is a detailed chart or document that lists the interchange fees set by MasterCard for various types of credit and debit card transactions. Interchange fees are transaction fees that the merchant’s bank (acquiring bank) pays to the cardholder’s bank (issuing bank) for the acceptance of card-based transactions. These fees are a significant component of the various costs that merchants must pay to accept credit and debit cards.
MasterCard: US Region Interchange Bulletin
Definition
The MasterCard interchange table defines the fees charged for different scenarios, including but not limited to the type of card used (e.g., credit, debit, prepaid), the transaction environment (e.g., online, in-store), the merchant category (e.g., retail, restaurants, government services), and the geographic region. The rates are set by MasterCard and vary based on these factors, reflecting the cost and risk associated with processing different types of transactions.
Purpose
The primary purpose of the MasterCard interchange table is to:
- Facilitate the compensation of issuing banks for the risks and costs they incur in processing card transactions, including fraud and credit risk.
- Encourage the acceptance of MasterCard payments by ensuring that issuing banks and acquiring banks can cover their costs and potentially earn a profit.
- Support the overall card network ecosystem by balancing fees in a way that promotes card usage among consumers while making it economically viable for merchants and banks.
Who Uses It
- Issuing Banks: Use the table to determine how much they will be compensated for transactions processed on cards they issue.
- Acquiring Banks and Payment Processors: Use the table to understand the costs associated with transactions they process for merchants.
- Merchants: Indirectly affected by the interchange rates, as these fees are part of the overall cost of accepting card payments, which can influence their choice of accepted payment methods and negotiations with payment processors.
- Financial Analysts and Regulators: Monitor interchange fees as part of the broader analysis of the payments industry and regulatory compliance.
What It Displays
The MasterCard interchange table displays:
- Interchange Fees: Listed as percentages of the transaction amount plus a fixed fee per transaction, varying by transaction type, merchant category, and other factors.
- Specific Conditions: Details the specific conditions under which different rates apply, such as the distinction between card-present and card-not-present transactions.
- Regional Variations: Shows how interchange fees differ across countries and regions, reflecting the varying costs and risks of card transactions globally.
Example
While specific rates are subject to change and vary widely, an example entry in an interchange table might look like this:
- Transaction Type: Credit Card – Retail
- Interchange Fee: 1.5% + $0.10
- Conditions: Card-Present Transaction in the United States
This example would indicate that for retail transactions in the United States where the credit card is physically presented, the merchant’s bank pays the cardholder’s bank an interchange fee of 1.5% of the transaction amount plus a ten-cent fixed fee.
Interchange tables are vital tools for understanding the costs associated with card payments, guiding financial decisions across the payment processing ecosystem. They help maintain a balance that encourages the widespread acceptance of cards, benefiting consumers, merchants, and banks alike.
—
This page was last updated on February 8, 2024.
–