Interchange fee confusion

Weybridge78 · 18 March 2018 at 5:51PM

Hi all.

Just wanted some clarification with regards to all the fees/groups involved when you carry out a debit or credit card transaction. I'm confused as to how exactly interchange fees work. Do Visa and MasterCard set interchange fees?

For example, NatWest issue Visa debit cards. If Visa receives money for each transaction, then how does NatWest make money? I know I may have it the wrong way round, but would really appreciate someone putting it in layman's terms.

Thanks.

molerat · 18 March 2018 at 5:59PM

Natwest charge the retailer a merchant fee larger than the interchange fee.
http://www.theukcardsassociation.org.uk/Interchange/index.asp

When a transaction takes place the acquirer will pay the retailer the value of that transaction after deduction of a Merchant Service Charge (MSC) that will include a number of components including interchange, processing costs, terminal rental etc. The MSC charge is negotiated directly between the acquirer and retailer.

System · 18 March 2018 at 8:57PM

molerat wrote: »

Natwest charge the retailer a merchant fee larger than the interchange fee.
http://www.theukcardsassociation.org.uk/Interchange/index.asp

Not quite accurate molerat.

The merchant fee will be payable to the retailer's card processor - this will incorporate the interchange fee.

Here is iZettle for example.

Interchange fee confusion

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