Understanding Interchange

Find out what interchange is and the value it delivers

What is interchange?

Interchange is a small fee paid by a merchant's bank (acquirer) to a cardholder's bank (issuer) to compensate the issuer for the value and benefits that merchants receive when they accept electronic payments. It enables banks that issue electronic payments to deliver tremendous value to merchants, governments and consumers.

Interchange helps maximise the value delivered to all stakeholders

 

Australian Businesses 

Business benefits in many ways as a result of interchange including reducing the significant costs associated with counting, safeguarding and transporting cash and limiting the losses that occur when cash received is lost or stolen. Merchants who accept cards also receive the most important commercial benefit:  they increase sales. Studies show that consumers spend more when they use cards and merchants make more money when they accept cards. This is not surprising since shoppers using cards are not limited to cash on hand but can access their funds on deposit or credit available from their banks when they make their purchasing decisions.  Interchange provides convenience, security and fraud prevention and supports the use of credit cards, which increases sales and guarantees payment for those businesses who accept Mastercard cards. For example, payment is guaranteed to the business when a good is sold but the cardholder does not pay their credit card bill.

Businesses benefit from guaranteed payment, increased sales and lower processing costs than those associated with paper payments such as cash and cheques. Electronic payments also provide them with the ability to attract and retain customers with a fast and efficient buying experience.                                                                                                                                                 

  • Credit and debit card transactions are 4.5 and 2.5 times larger than cash purchases respectively
  • Every year, banks write off 2-4% of credit card balances as losses – a cost that would sit with retailers without interchange
  • When compared to acceptance of cash, the additional value provided  to merchants by electronic payments  is about 3 to 4 times the total cost of acceptance

Retailers, in particular, have seen the value of interchange through increased speed at the point of sale, leveraging ‘tap and go’ or contactless transactions, reducing fraud, the cost of handling cash, and reducing the amount of cash held in stores (making stores safer for team members).  

Governments

Electronic payments facilitate economic activity and provide the necessary infrastructure for citizens and businesses to interact in a financial ecosystem. Government and the public sector are major beneficiaries of interchange as they utilise many different payment options including commercial cards. For example, electronic payments have revolutionised welfare payments systems

Electronic payments help safeguard against waste, fraud and abuse

  • Using electronic payments to deliver social benefits is more efficient and secure
  • Black and grey economies fueled by untraceable and untaxable cash payments flourish where electronic payments use is low

Consumers

Interchange delivers major benefits to consumers. Not only does it allow businesses to accept their cards, it contributes to the cost of fraud prevention and pays for the interest free days on credit cards. For example, in the event of a stolen card, Mastercard cardholders are protected from fraud or unauthorised transactions under Mastercard’s Zero Liability Policy (For more information click here) Convenience and safety, increased opportunity for financial inclusion, access to rewards and incentives and the choice of thousands of innovative credit, debit and prepaid payment products are among the many benefits consumers derive from electronic payments. 

  • Payments allow consumers to access money whenever and wherever they want
  • Interchange makes it possible for issuers to provide consumers with interest-free periods on credit cards
  • Electronic payments provide consumers with a more secure and efficient way to pay - whether in-person, online or in-app

Our role 

Mastercard does not earn revenue from interchange.

Mastercard sets interchange rates within limits determined by the Reserve Bank of Australia and based on the value delivered by the issuing bank as well as the benefits of accepting electronic payments. Setting interchange at the right level is important because if interchange rates are set too high, merchants may choose not to accept cards; and, if interchange is set too low, issuing banks have no incentive to cover the risks of issuing payment cards.

Setting interchange rates at the appropriate level also helps ensure that both issuers and acquirers deliver services that optimise the effectiveness of the payments system and spur development of innovative payment solutions. 

Flexible interchange rates make it possible for electronic payments to deliver maximium value at the lowest cost for both merchants and consumers. Interchange also promotes credit availability for small businesses and is a key driver for financial inclusion when set at the optimal level.

What you need to know

Learn more about interchange and the benefits of the system it helps support through the following resources:

Interchange Facts and Myths

Consequences of the Mandated Decrease of Interchange Fees in the United States

Impact of Regulation in Australia

In accordance with paragraph 20 of the Reserve Bank of Australia's Standard - The Setting of Wholesale ("Interchange") Fees in the Designated Credit Card Schemes (the "Standard") made under the Payments Systems (Regulation) Act 1998, Mastercard Worldwide hereby advises that, effective immediately, the following interchange fees will apply to Mastercard purchase transactions in Australia where the card issuer and merchant acquirer are both Australian members

Mastercard Credit Card Transactions

Program Type Priority Rate incl. GST (AUD)
Charities 1 0.00%
Strategic Merchants 1 2 0.25%
Strategic Merchants 2 3 0.32%
Contactless & MasterPass (excluding commercial cards and <= AUD 60) 4 0.32%
Government Services, Utilities & Insurance 5 0.32%
Petroleum 6 0.32%
Education & Learning 7 0.32%
Recurring Payments 8 0.32%
Advanced Online Security – SecureCode Merchant UCAF 9 0.32%
Advanced Online Security – SecureCode Full UCAF 9 0.32%
Advanced Online Security – Digital Secure Remote Payment 9 0.32%
Advanced Online Security – Masterpass Advanced Checkout 9 0.32%
Consumer Elite 10 2.00%
Consumer Super Premium 11 1.22%
Commercial Large Ticket (=> AUD 10,000) 12 1.14%
Business Elite 13 1.98%
Commercial Business Executive 14 1.15%
Commercial Corporate Executive 15 1.14%
Commercial 16 0.94%
Consumer Premium 17 0.70%
Mastercard Digital Enablement Service 18 0.70%
Consumer Standard 19 0.32%

 

Mastercard Credit Card Interchange Fee Qualifying Criteria

Interchange Category Description
Charities Available to merchants set up with card acceptor business code (MCC) 8398 that are recognised by the Australian Taxation Office as charitable organisations.
Strategic Merchants 1 Available to merchants and or merchant groups (as advised by Mastercard from time to time), which meet agreed performance requirements.
Strategic Merchants 2 Available to merchants and or merchant groups (as advised by Mastercard from time to time), which meet agreed performance requirements.
Contactless & Masterpass Available for all Mastercard contactless and Masterpass transactions (except on Commercial Cards) equal to or less than AUD 60, except for transactions that would qualify for Charities and Strategic Merchant. Masterpass transactions must be correctly identified using the Wallet Identifier in the authorisation and clearing messages
Government, Utilities & Insurance Available to the following MCCs: 9211, 9222, 9223, 9311, 9399, 9402, 9405, 4812, 4813, 4814, 4816, 4821, 4899, 4900, 5960, 6300.
Petroleum Available to the following MCCs: 5541, 5542
Education and Learning Available to the following MCCs: 8211, 8220, 8241, 8244, 8249, 8299, 8351.
Recurring Payments Available for transactions containing the Recurring Payment indicator except for transactions that would qualify for Charities, Strategic Merchants, Contactless & Masterpass, Government, Utilities & Insurance, Petroleum, and Education & Learning.
Advanced Online Security Available for SecureCode (Merchant UCAF & Full UCAF), Masterpass Advanced Checkout and DSRP (Digital Secure Remote Payment) transactions except for transactions that would qualify for Charities, Strategic Merchants, Contactless & Masterpass, Government, Utilities & Insurance, Petroleum, Education & Learning, and Recurring Payments.
Consumer Elite Available for Consumer World Elite™ Mastercard cards transactions except for transactions that would qualify for Charities, Strategic Merchants, Contactless & Masterpass, Government, Utilities & Insurance, Petroleum, Education & Learning, Recurring Payments, and Advanced Online Security.
Consumer Super Premium Applicable for Consumer World Mastercard cards transactions except for transactions that would qualify for Charities, Strategic Merchants, Contactless & Masterpass, Government, Utilities & Insurance, Petroleum, Education & Learning, Recurring Payments, Advanced Online Security, and Consumer Elite.
Commercial Large Ticket Available for Corporate Executive cards transactions equal or greater than AUD 10,000 except for transactions that would qualify for Charities, Strategic Merchants, Government, Utilities & Insurance, Petroleum, Education & Learning, Recurring Payments, and Advanced Online Security, excluding T&E transactions (MCCs: 3000-3299, 4511, 3351-3500, 7512, 7513, 7519, 3501-3999, 7011, 4112, 5812, 5813, 5814, 4411).
Business Elite Applicable for Commercial Elite cards transactions except for transactions that would qualify for Charities, Strategic Merchants, Government, Utilities & Insurance, Petroleum, Education & Learning, Recurring Payments, Advanced Online Security, and Commercial Large Ticket.
Commercial Business Executive Applicable for Business Executive Mastercard cards transactions except for transactions that would qualify for Charities, Strategic Merchants, Government, Utilities and Insurance, Petroleum, Education & Learning, Recurring Payments, Advanced Online Security, Commercial Large Ticket, and Business Elite.
Commercial Corporate Executive Applicable for Corporate Executive Mastercard cards transactions except for transactions that would qualify for Charities, Strategic Merchants, Government, Utilities & Insurance, Petroleum, Education & Learning, Recurring Payments, Advanced Online Security, Commercial Large Ticket, Business Elite, and Commercial Business Executive.
Commercial Available to commercial card transactions less than AUD 10,000 except for transactions that would qualify for Charities, Strategic Merchants, Government, Utilities & Insurance, Petroleum, Education & Learning, Recurring Payments, Advanced Online Security, Commercial Large Ticket, Business Elite, Commercial Business Executive, and Commercial Corporate Executive.
Consumer Premium Available for all Customer Platinum cards transactions except for transactions that would qualify for Charities, Strategic Merchants, Contactless & Masterpass, Government, Utilities & Insurance, Petroleum, Education & Learning, Recurring Payments, Advanced Online Security, Consumer Elite, and Consumer Super Premium.
Mastercard Digital Enablement Service Available for all Mastercard Digital Enablement Service transactions except for transactions that would qualify for Charities, Strategic Merchants, Contactless & Masterpass, Government, Utilities & Insurance, Petroleum, Education & Learning, Recurring Payments, Advanced Online Security, Consumer Elite, Consumer Super Premium, Commercial Large Ticket, Business Elite, Commercial Business Executive, Commercial Corporate Executive, Commercial, and Consumer Premium.
Consumer Standard Available for all domestic credit transactions not qualifying for any other interchange category.

 

Mastercard Debit Card Transactions

Program Type Priority Rate incl. GST (AUD)
Charities 1 0.00
Micropayment (≤ AUD 15) 2 0.004
Strategic Merchants 1 3 0.031
Strategic Merchants 2 4 0.040
Contactless & Masterpass (≤ AUD 60) 5 0.065
Government, Utilities & Insurance 6 0.077
Petroleum 7 0.077
Recurring Payments 8 0.110
Advanced Online Security – SecureCode Merchant UCAF 9 0.088
Advanced Online Security – SecureCode Full UCAF 9 0.088
Advanced Online Security – Digital Secure Remote Payment 9 0.088
Advanced Online Security – Masterpass Advanced Checkout 9 0.088
Business Premium Debit 10 1.00%
Commercial Debit 11 1.00%
Consumer Premium Debit 12 1.00%
Mastercard Digital Enablement Service 13 0.70%
Consumer Electronic Debit 14 0.140
Consumer Standard Debit 15 0.30%

 

1.00%

1.00%
1.00%
1.00%
1.00%

 

Mastercard Prepaid Card Transactions

Program Type Priority Rate incl. GST (AUD)
Charities 1 0.00
Strategic Merchants 1 2 0.031
Strategic Merchants 2 3 0.040
Commercial Prepaid 4 1.00%
Consumer Premium Prepaid 5 0.55%
Consumer Electronic Prepaid 6 0.132
Consumer Standard Prepaid 7 0.132

 

Mastercard Debit and Prepaid Purchase with Cash Back Rate

  All Products
Group
Rate incl. GST(AUD)
All -0.175

 

Mastercard Debit Card Interchange Fee Qualifying Criteria

Interchange Category Description
Charities Available to merchants set up with card acceptor business code (MCC) 8398 that are recognised by the Australian Taxation Office as charitable organisations.
Micropayments Available to all transactions equal to or less than AUD 15 other than transactions qualifying for Charities.
Strategic Merchants 1 Available to merchants and or merchant groups (as advised by Mastercard from time to time), which meet agreed performance requirements.
Strategic Merchants 2 Available to merchants and or merchant groups (as advised by Mastercard from time to time), which meet agreed performance requirements.
Contactless & Masterpass Available for all Mastercard contactless and Masterpass transactions equal to or less than AUD 60, except for transactions that would qualify for Charities and Strategic Merchant. Masterpass transactions must be correctly identified using the Wallet Identifier in the authorisation and clearing messages.
Government, Utilities & Insurance Available to the following MCCs: 9211, 9222, 9223, 9311, 9399, 9402, 9405, 4812, 4813, 4814, 4816, 4821, 4899, 4900, 5960, 6300.
Petroleum Available to the following MCCs: 5541, 5542.
Recurring Payments Available for transactions containing the Recurring Payment indicator except for transactions that would qualify for Charities, Mircopayments, Strategic Merchants, Contactless & Masterpass, Government, Utilities & Insurance, and Petroleum.
Advanced Online Security Applicable for transactions with SecureCode (Merchant UCAF & Full UCAF), Masterpass Advanced Checkout and DSRP (Digital Secure Remote Payment) except for transactions that would qualify for Charities, Micropayments, Strategic Merchants, Contactless & Masterpass, Government, Utilities & Insurance, Petroleum, and Recurring Payments.
Business Premium Debit Available for all Business Premium Debit transactions except for transactions that would qualify for Charities, Micropayments, Strategic Merchants, Contactless & Masterpass, Government, Utilities & Insurance, Petroleum, Recurring Payments, and Advance Online Security.
Commercial – Debit Available for all Commercial Debit transactions except for transactions that would qualify for Charities, Mircopayments, Strategic Merchants, Contactless & Masterpass, Government, Utilities & Insurance, Petroleum, Recurring Payments, Advanced Online Security, and Business Premium Debit.
Consumer Premium Debit Available for all Consumer Premium Debit card transactions except for transactions that would qualify for Charities, Micropayments, Strategic Merchants, Contactless & Masterpass, Government, Utilities & Insurance, Petroleum, Recurring Payments, Advanced Online Security, Business Premium Debit, and Commercial Debit.
Mastercard Digital Enablement Service Available for all Mastercard Digital Enablement Service transactions except for transactions that would qualify for Charities, Micropayments, Strategic Merchants, Contactless & Masterpass, Government, Utilities & Insurance, Petroleum, Recurring Payments, Advanced Online Security, Business Premium Debit, Commercial Debit, and Consumer Premium Debit.
Consumer Electronic Debit Available for all Consumer Debit Mastercard transactions conducted at an electronic data capture terminal and authorised by the issuer except for transactions that would qualify for Charities, Micropayments, Strategic Merchants, Contactless & Masterpass, Government, Utilities & Insurance, Petroleum, Recurring Payments, Advanced Online Security, Business Premium Debit, Commercial Debit, Consumer Premium Debit, and Mastercard Digital Enablement Service.
Consumer Standard Debit Available for all domestic Debit transactions not qualifying for any other interchange category.
Purchase with Cash Back Available for all Debit Mastercard cards at Australian merchants where service is provided. Applicable to Cashback component of transaction only.

 

Mastercard Prepaid Card Interchange Fee Qualifying Criteria

Interchange Category Description
Charities Available to merchants set up with MCC 8398 that are recognised by the Australian Taxation Office as charitable organisations.
Strategic Merchants 1 Available to merchants and or merchant groups (as advised by Mastercard from time to time), which meet Mastercard performance requirements.
Strategic Merchants 2 Available to merchants and or merchant groups (as advised by Mastercard from time to time), which meet Mastercard performance requirements.
Commercial Prepaid Available for Commercial Prepaid card transactions except for transactions that would qualify for Charities and Strategic Merchants.
Consumer Premium Prepaid Available for Consumer Premium Prepaid card transactions except for transactions that would qualify for Charities, and Strategic Merchants.
Consumer Electronic Prepaid Available for Consumer Prepaid card transactions conducted at an electronic data capture terminal and authorised by the issuer except for transactions that would qualify for Charities, Strategic Merchants, and Consumer Premium Prepaid.
Consumer Standard Prepaid Available to all domestic Prepaid transactions not qualifying for any other interchange category.
Purchase with Cash Back Available for all Prepaid Mastercard cards at Australian merchants where service is provided. Applicable to Cashback component of transaction only.

 

Mastercard reserves the right to change these fees as it deems appropriate from time to time. Any such changes to these fees will be published on this site as required by the Standard.

Enquiries regarding interchange fees should be directed to Mastercard Worldwide at (02) 9466 3700.