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Mastercard interchange rates and fees

Current interchange rates Network assessment fees

As a Mastercard merchant, it’s important for you to know the economic model that underlies payment card transactions. Although Mastercard interchange rates have generally been available to merchants by request to acquirers and other card acceptance providers, we want the process to be as transparent as possible.

What is interchange?

Interchange is a small fee paid by a merchant’s bank (acquirer) to a cardholder’s bank (issuer) to compensate the issuer for the value and benefits that merchants receive when they accept electronic payments. It enables banks that issue electronic payments to deliver tremendous value to merchants, governments and consumers.

Our role

Mastercard does not earn revenue from interchange.

Where not fully regulated by the government, Mastercard sets interchange rates based on the value delivered by the issuing bank and the benefits of accepting electronic payments. Setting interchange at the right level is important because if interchange rates are set too high, merchants may choose not to accept cards; and, if interchange is set too low, issuing banks have no incentive to cover the risks of issuing payment cards.

Setting interchange rates at the appropriate level also helps ensure that both issuers and acquirers deliver services that optimize the effectiveness of the payments system and spur development of innovative payment solutions.

Flexible interchange rates make it possible for electronic payments to deliver maximum value at the lowest cost for both merchants and consumers. Interchange also promotes credit availability for small businesses and is a key driver for financial inclusion when set at the optimal level.

The benefits that interchange delivers to all parties

Consumers

Consumers derive significant value from electronic payments including convenience and safety when they make a purchase, increased opportunity for financial inclusion, access to rewards or incentives and the choice of thousands of debit, credit and prepaid payment products.

Merchants

Merchants benefit from guaranteed payment; increased sales; fraud protection; lower processing costs than those associated with other forms of payment such as cheques and cash; and the ability to attract and retain customers with a fast, efficient buying experience.

Issuers

By receiving interchange fees from the merchant’s bank, issuers are able to bear the risks and costs associated with extending electronic payments to their customers.

Governments

Governments experience significant efficiencies and promote financial inclusion for their citizens when they choose to distribute social benefits and other programs via electronic payments.

Society

Electronic payments are often the point of entry for new consumers to a formal financial ecosystem. By incentivizing issuers to create innovative payment programs, interchange helps encourage financial inclusion for consumers who could not otherwise participate.

Acquirer role

Financial institutions that provide card acceptance services to merchants are typically referred to as “acquirers.” Mastercard has no involvement in acquirer and merchant pricing policies or agreements. Interchange fees are one component of the Merchant Discount Rate (MDR) established by acquirers, which is paid by merchants to acquirers in consideration for card acceptance services.

How rates are determined

Mastercard interchange rates are established by Mastercard and are generally paid by acquirers to card issuers on purchase transactions conducted on Mastercard cards. Interchange rates are only one of many cost components included in an MDR and are a necessary and efficient method by which Mastercard maintains a strong and vibrant payments network. Setting interchange rates is a challenging proposition that involves an extremely delicate balance. If interchange rates are set too high, such that they lead to disproportionately high MDRs, merchants’ desire and demand for Mastercard acceptance will drop. If interchange rates are set too low, card issuers’ willingness to issue and promote Mastercard cards will drop, as will consumer demand for such cards. In response to these competitive forces, we strive to maximize the value of the Mastercard system (including the dollars spent on Mastercard cards, the number and types of cards in circulation and the number and types of merchants accepting Mastercard cards) by setting default interchange rates at levels that balance the benefits and costs to both cardholders and merchants.

We have published interchange rates that apply to Canadian merchants’ transactions, which include Canadian interchange rates (that is, the interchange rates that apply to transactions conducted on a Canada-issued card at a Canadian merchant) and Interregional interchange rates (the interchange rates that apply to transactions conducted on a non-Canada-issued card at a Canadian merchant).