What are the different types of interchange fees?
Interchange fees are a type of fee that credit card providers charge merchants every time a credit card transaction takes place. In Delaware, credit card law dictates that the types of interchange fees may vary depending on the card issuer, cardholder, and merchant. The most common type of interchange fee is the flat fee, which is the same regardless of the value of the transaction. Merchants are notified of the amount of the flat fee by the card issuer before the transaction takes place. The tiered fee is another type of interchange fee, which is based on a percentage of the transaction amount. Typically, merchants are notified of the rate of the tiered fee by the card issuer before the transaction occurs. Another type of interchange fee is the cost plus fee. Card issuers calculate this fee by taking a percentage of the total cost of the goods or services purchased, and then adding an additional flat fee. Finally, the interchange fee may also be adjusted for certain types of businesses. For instance, certain businesses - such as grocery stores or restaurants - may pay a lower interchange fee than other businesses. This type of fee is known as a merchant discount fee. In summary, the different types of interchange fees vary depending on the card issuer, cardholder, and merchant. They include flat fees, tiered fees, cost plus fees, and merchant discount fees. Each of these fees help to cover the various costs associated with credit card processing.
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