Interchange fees

Interchange fees are charged to cardholders or merchants who accept electronic payments from other banks through a card network, such as VISA or MasterCard. They are generally regarded as payment for the convenience of receiving funds at the point of sale. Merchants do not pay interchange fees directly, but rather accept lower prices for their goods and services. Credit card associations usually set the interchange fees, which make up as much as 90% of a company's credit transaction expenses. This is why most merchants prefer cash or debit cards, although they cannot legally refuse credit card payments.