Why interchange matters
For a card-issuing fintech, interchange is usually the single largest revenue line. For a card-accepting merchant, it is the single largest cost line. The card network sets the rate; the acquirer pays the issuer; the merchant ultimately funds it through the merchant discount rate (MDR).
This makes interchange the heart of fintech card economics. A neobank that earns 1.5% on every debit swipe lives or dies on that math.
How it varies
Interchange is not a single number. It is a matrix of:
- Card type — debit (lower; capped by Reg II for issuers with >$10B in assets) vs credit vs prepaid vs commercial
- Channel — card-present vs card-not-present
- Merchant category — supermarket vs e-commerce vs utility
- Transaction characteristics — pin vs signature, contactless, large-ticket
Common pitfalls
- "Interchange revenue" without netting. Your sponsor bank, BIN sponsor, processor, and program manager all take a slice. Your net interchange is what funds your business.
- Reg II exposure. US debit interchange is capped for large issuers; pricing reform proposals could lower the cap further.
- Network rule changes. Networks adjust interchange tables periodically. A program built on a 2022 schedule may not pencil out in 2026.
Interchange is the input to almost every fintech card business model — model it carefully and watch it constantly.