Interchange fee

The Economic Times  Aug 31  Comment 
The National Payments Corporation of India (NPCI) had proposed the interchange fee at 1% of the transaction amount subjected to a maximum of Rs 12 while no fee for transactions up to Rs 100.
The Hindu Business Line  Feb 22  Comment 
The ATM interchange fee needs to go up to Rs 18 at least from the current Rs 15, said Sanjeev Patel, Chief Executive Officer, Tata Communications Payment Solutions (TCPS), the leading playe
The Economic Times  Jan 1  Comment 
Banks with big micro-ATM network want fee on transactions by competitors’ customers to be raised to 1% from 0.5% as they find it unviable to maintain these ATMs.
The Hindu Business Line  Nov 24  Comment 
For ATM operators, revenue growth hasn’t been keeping pace with costs, says Euronet India’s Himanshu Pujara
The Economic Times  Apr 26  Comment 
These charges, which are mostly agreeable to the bigger banks, were decided after almost a month-long debate.
Mondo Visione  Jan 14  Comment 
On 19 February 2016 from 14:00 to 16:00, the European Banking Authority (EBA) will hold a public hearing on the consultation launched on its draft technical standards on the separation of payment card schemes and processing entities under the...  Jun 8  Comment 
VIENNA (dpa-AFX) - A Regulation capping interchange fees for payments using consumer debit and credit cards and improving competition for all card payments entered into force Monday. The European Commission estimates that the rules could lead to...
The Hindu Business Line  Sep 15  Comment 
RBI leaves it to banks to reach a consensus
Banking Business Review  Mar 24  Comment 
NAFCU today hailed the overturning of the lower court decision by a federal appeals court regarding interchange.
Forbes  Mar 21  Comment 
As you swipe your credit card for lunch today, a few different players will take a piece of your payment before the sandwich shop gets its share. Let’s say you bought a $10 sandwich and the merchant will lose 3% on card fees. The lion’s share...


These are fees paid by one bank to another to cover the handling costs and credit risk in a bank card transaction. Because interchange fees generally flow from the seller toward the bank that funded the transaction, there is some risk assumed by the funding bank in the process.

Consider a credit card transaction - the merchant bank (also called "acquiring bank," as it processes the sales drafts of merchants and pays them together in a lump sum) pays an interchange fee to the bank that issued the credit card. The issuing bank then bills the cardholder. However, the card-issuing bank is now responsible for payment to the merchant bank - and there is no guarantee that the cardholder will make the payment. Meanwhile, when the acquiring bank pays the merchant, it deducts a merchant discount rate - the interchange fee that goes to the issuing bank, plus a profit for the acquiring bank itself.

The interchange fee is a percentage of the transaction amount, and it is derived from an accounting formula that takes into account authorization costs, fraud and credit losses, and the average bank cost of funds.

In ATM and debit card systems, interchange flows in the opposite direction - when a consumer gets cash, the bank that owns the ATM collects the fee.

See also: Credit Card Industry

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