{"id":6064,"date":"2025-07-08T06:02:40","date_gmt":"2025-07-08T06:02:40","guid":{"rendered":"https:\/\/buvei.com\/blog\/?p=6064"},"modified":"2025-07-08T06:02:51","modified_gmt":"2025-07-08T06:02:51","slug":"interchange-fee-virtual-card","status":"publish","type":"post","link":"https:\/\/buvei.com\/blog\/interchange-fee-virtual-card\/","title":{"rendered":"Interchange Fee Explained: How Card Payments Are Priced"},"content":{"rendered":"
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Every time a customer swipes a card, there's a hidden cost that quietly moves in the background. While this fee is typically paid by merchants, it often ends up reflected in the price consumers pay. This behind-the-scenes cost is known as the interchange fee<\/strong>\u2014one of the most fundamental yet misunderstood components of today\u2019s global payment ecosystem.<\/div>\n
In this article, we\u2019ll unpack how interchange fees work, who pays whom, and how virtual card platforms like Buvei<\/a><\/strong> are optimizing this cost structure to help small and medium-sized businesses (SMBs) take control of their payments.<\/div>\n

What Is an Interchange Fee?<\/h3>\n
An interchange fee<\/strong> is a fee paid by the acquiring bank<\/strong> (the merchant\u2019s bank) to the issuing bank<\/strong> (the cardholder\u2019s bank). It compensates the issuer for handling payment risks, providing credit, and facilitating the transaction process.<\/div>\n
In simpler terms, when a customer makes a card payment, this fee is deducted from the merchant\u2019s end and passed on to the cardholder\u2019s bank. While end-users don't pay this fee directly, it\u2019s typically baked into the merchant\u2019s pricing model.<\/div>\n
\ud83d\udccc Example:<\/em> If you pay $100 via Visa at an online store, roughly 1.5% to 2% ($1.50\u2013$2.00) goes to your card issuer as interchange, deducted from what the merchant ultimately receives.<\/div>\n

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Where Does the Swipe Fee Go? A Breakdown<\/h3>\n
A typical card payment involves several cost components:<\/div>\n
\n\n\n\n\n\n<\/colgroup>\n\n\n\n\n\n
Fee Type<\/strong><\/td>\nTypical Range<\/strong><\/td>\nRecipient<\/strong><\/td>\nPurpose<\/strong><\/td>\n<\/tr>\n
Interchange Fee<\/td>\n1.0% \u2013 2.5%<\/td>\nIssuing Bank<\/td>\nCompensates risk, credit, and processing<\/td>\n<\/tr>\n
Network Fee<\/td>\n0.05% \u2013 0.15%<\/td>\nCard Network (Visa, etc.)<\/td>\nInfrastructure and fraud monitoring<\/td>\n<\/tr>\n
Processing\/Markup Fee<\/td>\n0.2% \u2013 1.0%<\/td>\nPSPs \/ Virtual Card Platforms<\/td>\nPlatform services, API access, support<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/div>\n
\u26a0\ufe0f These percentages can vary significantly depending on factors like country, card type (debit, credit, commercial), and transaction channel (online vs. in-store).<\/div>\n

Who Sets Interchange Rates?<\/h3>\n
Interchange fees are typically set by card networks<\/strong> like Visa or Mastercard, and they vary based on:<\/div>\n