Understanding Interchange Fees: A Merchant's Guide

Interchange fees represent the single largest cost in payment processing for Canadian merchants. These fees, set by card networks like Visa and Mastercard, are paid by the merchant's acquiring bank to the cardholder's issuing bank every time a card transaction occurs. Rates vary by card type, transaction method, card network, and merchant category. Premium rewards cards often carry higher costs than standard cards, while domestic debit usually follows a different pricing model. Understanding the difference between interchange-plus pricing and flat-rate pricing is especially useful for merchants with meaningful monthly volume. With interchange-plus, you can see the network cost and the processor markup separately instead of reading one blended number. There are several strategies to reduce your effective interchange costs. First, ensure your terminal is set up to accept Interac debit by default for domestic debit cards. Second, implement address verification (AVS) and CVV checks for online transactions — card-not-present transactions that include these checks qualify for lower interchange rates. Finally, work with a payment partner that can explain statement lines clearly. A good review should show where costs are structural, where setup can be improved, and where a different processor or pricing model may help.

Understanding Interchange Fees: A Merchant's Guide

Ready to optimize your payments?