Understanding Interchange

    Since their establishment in the 1960s, open payment systems or, as they are often called, "four-party" payment systems, have delivered immense value to all constituents in the payments chain. These systems enable any bank, anywhere in the world, to link its customers (cardholders or merchants) with those of any other bank to transact business via payments cards, almost instantaneously.

    Interchange is a small fee paid by a merchant's bank (also known as the acquiring bank) to the cardholder's bank (the issuing bank) to compensate the issuing bank for a portion of the risks and costs it incurs. Here, you'll find the resources you need to understand interchange and the role it plays in balancing costs in the system and promoting a strong, competitive payments industry.

    What You Need to Know
    Learn more about interchange and the benefits of the system it helps support:

    Interchange: Facilitating Benefits to Cardholders, Merchants and Society Interchange Facts and Myths Interchange and the Durbin Amendment Interchange at a Glance Interchange and the Electronics Payments System (Downloadable audio file) Behind a Transaction (Windows Media File)
    Impact of Regulation in Australia
    Learn how interchange rules imposed by the Reserve Bank of Australia had negative consequences for competition and consumers:
    CRA International Report on Regulatory Intervention in the Payment Industry by the Reserve Bank of Australia Fact Sheet:The Unintended Consequences of the RBA's Regulation
    of Interchange (89 KB DOC)
    The Unintended Consequences of the RBA's Regulation of Interchange (Downloadable audio file)
    Views on Interchange
    The Econmics of Payment Card Interchange Fees and the Limits of Regulation, Todd J. Zywicki, International Center for Law and Economics (ICLE) and Foundation Professor of Law at George Mason University School of Law, June 2, 2010 Consumers Stand to Lose on Shift in Interchange American Banker, October 23, 2009