What are the different types of interchange fees?

Interchange fees are the processing fees that merchants and banks pay to credit card companies whenever a credit card is used as a form of payment. In New York, interchange fees are governed by the Credit Card Interchange Fee Act, which seeks to ensure that interchange fees are reasonable and proportional to the cost of processing a credit card transaction. There are three main types of interchange fees. The first is the merchant discount rate, which is a percentage of the sale price that the merchant pays to the credit card company. This fee will usually range from 2-4%. The second type of interchange fee is the authorization fee, which is the fee that the merchant pays for the approval of a credit card transaction. Authorization fees are usually much smaller than merchant discount rates, typically ranging from 10-30 cents per transaction. The third type of interchange fee is the foreign transaction fee, which is a fixed fee that merchants are charged when processing a transaction from a foreign card. This fee is usually a set percentage of the transaction, typically around 1-3%. In New York, total interchange fees are regulated and cannot exceed 2.90% of the transaction value plus $0.30. This means that the sum of all three types of interchange fees (merchant discount rate, authorization fee, and foreign transaction fee) cannot exceed 2.90% and $0.30.

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What are the different types of interchange fees?

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