Interchange Fee
Also called: swipe fee, merchant discount rate, MDR
The interchange fee is what a merchant's bank pays the card issuer on every transaction, typically 1.5–3% on US credit cards and far lower in capped markets like the EU. It funds rewards programmes, which is why premium cards cost merchants most. Economists note the effect is regressive: merchants raise prices for everyone, and cash-paying customers subsidise cardholders' points.