As a MasterCard merchant, it's important for you to know the economic model that underlies payment card transactions. Although MasterCard interchange rates have generally been available to merchants by request to acquirers and other card acceptance providers, we want the process to be as transparent as possible. We want our business to be as transparent as possible to you, because as members of the MasterCard family, you are trusted partners and critical to our success.
Financial institutions that provide card acceptance services to merchants are typically referred to as "acquirers." MasterCard has no involvement in acquirer and merchant pricing policies or agreements. Interchange fees are one component of the Merchant Discount Rate (MDR) established by acquirers, which is paid by merchants to acquirers in consideration for card acceptance services.
How rates are determined
MasterCard interchange rates are established by MasterCard, and are generally paid by acquirers to card issuers on purchase transactions conducted on MasterCard cards. Interchange rates are only one of many cost components included in a MDR, and are a necessary and efficient method by which MasterCard maintains a strong and vibrant payments network. Setting interchange rates is a challenging proposition that involves an extremely delicate balance. If interchange rates are set too high, such that they lead to disproportionately high MDRs, merchants' desire and demand for MasterCard acceptance will drop. If interchange rates are set too low, card issuers' willingness to issue and promote MasterCard cards will drop, as will consumer demand for such cards. In response to these competitive forces, we strive to maximize the value of the MasterCard system (including the dollars spent on MasterCard cards, the number and types of cards in circulation, and the number and types of merchants accepting MasterCard cards) by setting default interchange rates at levels that balance the benefits and costs to both cardholders and merchants.
We have published interchange rates that apply to U.S.-merchants' transactions, which include U.S. interchange rates (that is, the interchange rates that apply to transactions conducted on a U.S.-issued card at a U.S. merchant) and Interregional interchange rates (the interchange rates that apply to transactions conducted on a non—U.S.-issued card at a U.S. merchant).
We have included a Merchant Category Guide, as well as the key criteria associated with each interchange rate and a Glossary of Terms, to help you determine which of the many interchange rates may apply to your transactions. The interchange rate tables are organized by product type. Each interchange rate has a series of requirements, all of which must be satisfied in order for a transaction to qualify for that rate. The requirements include such factors as: merchant category; the time between authorization and clearing; the presence or absence of magnetic stripe data; the submission of enhanced transaction data; and a merchant's MasterCard sales and transaction volume. MasterCard systems ensure that all requirements are met when a transaction is submitted for a particular interchange rate. Merchants and acquirers should strive to meet all of the criteria necessary to qualify transactions for the rate(s) that are most advantageous to them.
MasterCard interchange rates are typically updated semiannually, and we will publish interchange rates and related criteria on this Web site generally concurrent with each rate update. While we will endeavor to keep the rates and related criteria on the Web site up to date, it is possible that this Web site will not be absolutely current in all regards. In the event of any discrepancy between the rates and criteria found at this Web site and those rates and criteria MasterCard deems to be the official rates and criteria will apply.
We are confident that this document gives you the information needed to understand the interchange rates and structure and determine which rates may apply to your transactions. However, we also recognize that this information is being made available to a very diverse audience, with diverse needs and expectations. MasterCard encourages merchants to speak with their acquirer or other card acceptance service provider, if they have questions regarding any aspect of MasterCard interchange rates, acceptance of MasterCard cards, or their card acceptance agreements.