Restaurant Credit Card Processing: Understanding Interchange

Tuesday, August 28, 2018
This article originally appeared on the National Restaurant Association website, which endorses Heartland as the preferred payment processor of the NRA.


Did you know that nearly 81 percent of the money spent at full-service restaurants in America is charged to debit, credit or prepaid cards? For restaurant owners, accepting a form of payment that isn’t “cash only” is a no-brainer. Although we’re well past credit and debit cards today with Apple Pay and other contactless payments, nonetheless, there’s a fee every time customers swipe to pay with plastic.

There’s a lot that goes into restaurant credit card processing and payment technology. Savvy restaurateurs know that many fees and parties are associated with each swipe … and they’re not all negotiable.

Restaurant Credit card processing fees: The basics

Restaurant credit card processing is complex, so here’s what you need to know.

You’re going to pay three types of fees: interchange, assessments and markup. Interchange and assessments are non-negotiable, and you have minimal control over them. The third, markup, is how your payment processor passes its costs to you.

Your base credit card processing fees are made up of interchange and assessments. All payment processors, no matter what they tell you, charge the same fees for interchange and assessments. No processor can give you a lower rate or a better deal on these base costs.

What is interchange?

Interchange is the fee paid between banks for the acceptance of credit card transactions. Each time a customer pays you, fees are associated with those swipes. Interchange is the largest portion of that expense. It’s paid to your card-issuing bank.

Your card-issuing bank isn’t your payment processor. It’s not the credit card company (Visa, MasterCard, Discover).  The card-issuing bank is a partner of Visa, MasterCard and Discover.

“Historically, interchange has been imposed upon businesses to reimburse issuing banks for lost interest resulting from a cardholder’s grace period for repaying their debt,” CardFellow says.

How is interchange calculated?

Partner banks decide how much they want to charge when you accept their credit cards. They set the fees. The fees are determined by:

  • Processing method (transaction type): Basically, is the card present or not?
  • Card type: Credit and debit cards have different categories.
  • Card owner: Who owns the card affects the category of the fee.
  • Card brand: The brand of a bankcard can impact interchange fee.

With all of those factors in mind, the card-issuing banks create a long list of interchange fees they then pass on to you, the restaurant owner.  To simplify the cost, credit card companies usually compute interchange rates into a flat rate plus a percentage of the sales total.

It’s important to note that interchange fees for the two largest card brands, Visa and MasterCard, change twice annually – in April and October. As a well-informed business owner, you’ll want to pay attention to that.

The most up to date interchange fee schedules for Visa and MasterCard can be found here:


Are interchange fees the same as interchange plus pricing?

Yes and no. Some payment processors offer an interchange plus pricing model. This model is a credit card processing pricing structure that allows for optimization of costs as it applies a fixed markup directly to interchange fees.

“Plus” typically refers to the credit card processors’ markup applied to each credit card transaction. Markup generally is expressed as basis points, accompanied by an authorization fee.

Whether you process hundreds or thousands of dollars in transactions every month, understanding your statement and the fees you’re charged can be confusing. Consider choosing Heartland, a payment processing partner that offers transparent pricing and an easy-to-read statement.

Get started.


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