How do interchange fees work?

When your customers make purchases with their branded debit, credit, and charge cards, you earn interchange fees. (article continues below)

Interchange is calculated as a fixed percentage of the total transaction value. How much you earn depends on several factors:

• Is it a debit card, a credit card, or a charge card?
• Is it a business or a personal card?
• Which bank issued the card?
• What banking infrastructure do you use?
• Was the purchase made online or offline?
• What is the merchant category (e.g. groceries, gas)?

For many companies, interchange fees are one of the most significant revenue streams generated by embedded finance. They can be kept as profits or returned to customers in the form of cashback or other rewards.