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 clause 6.1 of the Reserve Bank of Australia's Standard No.1 of 2016 - The Setting of Interchange Fees in the Designated Credit Card Schemes and Net Payments to Issuers and clause 6.1 of Standard No.2 of 2016-The Setting of Interchange Fees in the Designated Debit and Prepaid Card Schemes and Net Payments to Issuers (the "Standards") made under the Payments Systems (Regulation) Act 1998, Mastercard hereby advises that, effective immediately, the following interchange fees will apply to Mastercard transactions that are acquired in Australia and are initiated with a card issued within Australia.

Australia Intracountry Credit POS Interchange Rates

Interchange Category Name Priority Rate excl. GST Rate incl. GST
Charities 1 0.00% 0.00%
Mastercard Initiated Rewards 1 0.00% 0.00%
Commercial Executive 2 0.80% 0.88%
Strategic Merchants 1 3 0.18% 0.198%
Strategic Merchants 2 4 0.21% 0.231%
Strategic Merchants 3 5 0.25% 0.275%
Tokenised Contactless 6 0.80% 0.88%
Commercial 7 0.62% 0.682%
Tokenised Online 8 0.18% 0.198%
Consumer Elite and Super Premium 9 0.78% 0.858%
Consumer Premium - High Spend 10 0.67% 0.737%
Consumer Premium 11 0.45% 0.495%
Government, Utilities and Insurance 12 0.10% 0.11%
Petroleum 13 0.10% 0.11%
Education and Learning 14 0.10% 0.11%
Recurring Payments 15 0.10% 0.11%
Consumer Standard 16 0.19% 0.209%

 

Mastercard Credit Interchange Qualification 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.
Mastercard Initiated Rewards Applicable to a MasterCard initiated transaction for earn and redemption on Pay With Rewards (PWR).
Commercial Executive Available for Commercial Corporate Executive and Commercial Business Executive card transactions, except for transactions that would qualify for Charities and/or Mastercard Initiated Rewards.
Strategic Merchants 1 Currently available to card present and card not present transactions of merchants and / or merchant groups (as advised by Mastercard from time to time), that meet certain qualifying criteria deemed to be strategic to Mastercard, except for transactions that would qualify for Charities, Mastercard Initiated Rewards and/or Commercial Executive.
Strategic Merchants 2 Currently available to card present and card not present transactions of merchants and / or merchant groups (as advised by Mastercard from time to time), that meet certain qualifying criteria deemed to be strategic to Mastercard, except for transactions that would qualify for Charities, Mastercard Initiated Rewards, Commercial Executive and/or Strategic Merchants 1.
Strategic Merchants 3 Currently available to card present and card not present transactions of merchants and / or merchant groups (as advised by Mastercard from time to time), that meet certain qualifying criteria deemed to be strategic to Mastercard, except for transactions that would qualify for Charities, Mastercard Initiated Rewards, Commercial Executive, Strategic Merchants 1 and/or Strategic Merchants 2.
Tokenised Contactless Available for Tokenised Contactless transactions, except for transactions that would qualify for Charities, Mastercard Initiated Rewards, Commercial Executive and/or Strategic Merchants. Tokenised Contactless transactions must be correctly identified using the Wallet Identifier in the authorisation and clearing messages.
Commercial Available for Commercial card transactions, except for transactions that would qualify for Charities, Mastercard Initiated Rewards, Commercial Executive, Strategic Merchants and/or Tokenised Contactless.
Tokenised Online Available for Tokenised Online transactions, except for transactions that would qualify for Charities, Mastercard Initiated Rewards, Commercial Executive, Strategic Merchants, Tokenised Contactless and/or Commercial. Tokenised Online transactions must be correctly identified using the Wallet Identifier in the authorisation and clearing messages.
Consumer Elite and Super Premium Available for Consumer World Elite™ and Consumer World card transactions, except for transactions that would qualify for Charities, Mastercard Initiated Rewards, Commercial Executive, Strategic Merchants, Tokenised Contactless, Commercial and/or Tokenised Online.
Consumer Premium High Spend Available for qualifying Consumer Platinum Product Portfolio card transactions that meet certain criteria (determined at the sole discretion of Mastercard and consistently applied in the Australian market), except for transactions that would qualify for Charities, Mastercard Initiated Rewards, Commercial Executive, Strategic Merchants, Tokenised Contactless, Commercial, Tokenised Online and/or Consumer Elite and Super Premium.
Consumer Premium Available for Consumer Platinum card transactions, except for transactions that would qualify for Charities, Mastercard Initiated Rewards, Commercial Executive, Strategic Merchants, Tokenised Contactless, Commercial, Tokenised Online, Consumer Elite and Super Premium and/or Consumer Premium High Spend.
Government, Utilities & Insurance Available to the following MCCs: 9211, 9222, 9223, 9311, 9399, 9402, 9405, 4812, 4813, 4814, 4816, 4821, 4899, 4900, 5960, 6300, except for transactions that would qualify for Charities, Mastercard Initiated Rewards, Commercial Executive, Strategic Merchants, Tokenised Contactless, Commercial, Tokenised Online, Consumer Elite and Super Premium, Consumer Premium High Spend and/or Consumer Premium.
Petroleum Available to the following MCCs: 5541, 5542, except for transactions that would qualify for Charities, Mastercard Initiated Rewards, Commercial Executive, Strategic Merchants, Tokenised Contactless, Commercial, Tokenised Online, Consumer Elite and Super Premium, Consumer Premium High Spend, Consumer Premium and/or Government, Utilities & Insurance.
Education & Learning Available to the following MCCs: 8211, 8220, 8241, 8244, 8249, 8299, 8351, except for transactions that would qualify for Charities, Mastercard Initiated Rewards, Commercial Executive, Strategic Merchants, Tokenised Contactless, Commercial, Tokenised Online, Consumer Elite and Super Premium, Consumer Premium High Spend, Consumer Premium, Government, Utilities & Insurance and/or Petroleum.
Recurring Payments Available for transactions containing the Recurring Payment indicator, except for transactions that would qualify for Charities, Mastercard Initiated Rewards, Commercial Executive, Strategic Merchants, Tokenised Contactless, Commercial, Tokenised Online, Consumer Elite and Super Premium, Consumer Premium High Spend, Consumer Premium, Government, Utilities & Insurance, Petroleum and/or Education & Learning.
Consumer Standard Available for all domestic credit transactions not qualifying for any other interchange category.

Australia Intracountry Debit POS Interchange Rates

Interchange Category Name  Priority Rate excl. GST Rate incl. GST
Charities 1 AUD 0.00 AUD 0.00
Mastercard Initiated Rewards 1 AUD 0.00 AUD 0.00
Strategic Merchants 1 – Debit 2 AUD 0.01 AUD 0.011
Strategic Merchants 2 – Debit 3 AUD 0.02 AUD 0.022
Strategic Merchants 3 – Debit 4 AUD 0.03 AUD 0.033
Tokenised Contactless - Low Value (<= AUD 15) 5 AUD 0.04 AUD 0.044
Tokenised Contactless – Other (> AUD 15) 6 AUD 0.15 AUD 0.165
Transit Contactless 7 AUD 0.06 AUD 0.066
Other Card Present - Standard 8 AUD 0.04 AUD 0.044
Other Card Present - Premium 9 AUD 0.15 AUD 0.165
Other Card Present - Commercial 10 0.20% 0.22%
Tokenised Online 11 AUD 0.08 AUD 0.088
Other Card Not Present - Standard 12 AUD 0.15 AUD 0.165
Other Card Not Present - Premium 13 0.20% 0.22%
Other Card Not Present - Commercial 14 0.20% 0.22%

 

1.00%

1.00%
1.00%
1.00%
1.00%

 

Mastercard Debit Interchange Qualification 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
Mastercard Initiated Rewards Applicable to a Mastercard initiated transaction for earn and redemption on Pay With Rewards (PWR).;
Strategic Merchants 1

Currently available to card present and card not present transactions of merchants and / or merchant groups (as advised by Mastercard from time to time), that meet certain qualifying criteria deemed to be strategic to Mastercard, except for transactions that would qualify for Charities and/or Mastercard Initiated Rewards.

Strategic Merchants 2

Currently available to card present and card not present transactions of merchants and / or merchant groups (as advised by Mastercard from time to time), that meet certain qualifying criteria deemed to be strategic to Mastercard, except for transactions that would qualify for Charities, Mastercard Initiated Rewards and/or Strategic Merchants 1.

Strategic Merchants 3 Currently available to card present and card not present transactions of merchants and / or merchant groups (as advised by Mastercard from time to time), that meet certain qualifying criteria deemed to be strategic to Mastercard, except for transactions that would qualify for Charities, Mastercard Initiated Rewards, Strategic Merchants 1 and/or Strategic Merchants 2.
Tokenised Contactless – Low Value Available for Tokenised Contactless transactions equal to or less than AUD 15, except for transactions that would qualify for Charities, Mastercard Initiated Rewards and/or Strategic Merchants. Tokenised Contactless transactions must be correctly identified using the Wallet Identifier in the authorisation and clearing messages.
Tokenised Contactless – Other Available for Tokenised Contactless transactions, except for transactions that would qualify for Charities, Mastercard Initiated Rewards, Strategic Merchants and/or Tokenised Contactless – Low Value. Tokenised Contactless transactions must be correctly identified using the Wallet Identifier in the authorisation and clearing messages.
Transit Contactless Available for Transit Contactless transactions, except for transactions that would qualify for Charities, Mastercard Initiated Rewards, Strategic Merchants and/or Tokenised Contactless. Transit Contactless transactions must be correctly identified using the Transit Indicator in the authorisation and clearing messages.
Other Card Present - Standard Available for all Card Present transactions on Standard products, except for transactions that would qualify for Charities, Mastercard Initiated Rewards, Strategic Merchants, Tokenised Contactless and/or Transit Contactless.
Other Card Present – Premium Available for all Card Present transactions on Premium products, except for transactions that would qualify for Charities, Mastercard Initiated Rewards, Strategic Merchants, Tokenised Contactless and/or Transit Contactless.
Other Card Present – Commercial Available for all Card Present transactions on Commercial products, except for transactions that would qualify for Charities, Mastercard Initiated Rewards, Strategic Merchants, Tokenised Contactless and/or Transit Contactless.
Tokenised Online Available for Tokenised Online transactions, except for transactions that would qualify for Charities, Mastercard Initiated Rewards and/or Strategic Merchants. Tokenised Online transactions must be correctly identified using the Wallet Identifier in the authorisation and clearing messages.
Other Card Not Present - Standard Available for all Card Not Present transactions on Standard products, except for transactions that would qualify for Charities, Mastercard Initiated Rewards, Strategic Merchants and/or Tokenised Online.
Other Card Not Present Premium Available for all Card Not Present transactions on Premium products, except for transactions that would qualify for Charities, Mastercard Initiated Rewards, Strategic Merchants and/or Tokenised Online.
Other Card Not Present – Commercial Available for all Card Not Present transactions on Commercial products, except for transactions that would qualify for Charities, Mastercard Initiated Rewards, Strategic Merchants and/or Tokenised Online.

Mastercard Debit and Prepaid Purchase with Cashback Rate

  All Products
Group Rate incl. GST
All -AUD 0.175

 

Interchange Category Description
Purchase with Cash Back Available for all Debit and prepaid Mastercard cards at Australian merchants where service is provided. Applicable to Cashback component of transaction only.

Australia Intracountry Prepaid POS Interchange Rates

Interchange Category Name  Priority Rate excl. GST Rate incl. GST
Charities 1 AUD 0.00 AUD 0.00
Mastercard Initiated Rewards 1 AUD 0.00 AUD 0.00
Strategic Merchants 1 - Prepaid 2 AUD 0.01 AUD 0.011
Strategic Merchants 2 - Prepaid 3 AUD 0.02 AUD 0.022
Strategic Merchants 3 - Prepaid 4 AUD 0.03 AUD 0.033
Other Card Present - Standard 5 AUD 0.05 AUD 0.055
Other Card Present - Premium 6 AUD 0.15 AUD 0.165
Other Card Present - Commercial 7 0.20% 0.22%
Other Card Not Present - Standard 8 AUD 0.15 AUD 0.165
Other Card Not Present - Premium 9 0.20% 0.22%
Other Card Not Present - Commercial 10 0.20% 0.22%

 

Mastercard Prepaid Interchange Qualification Criteria

Interchange Category Description
Charities Available to merchants set up with MCC 8398 that are recognised by the Australian Taxation Office as charitable organisations.
Mastercard Initiated Rewards

Applicable to a Mastercard initiated transaction for earn and redemption on Pay With Rewards (PWR).

Strategic Merchants 1

Currently available to card present and card not present transactions of merchants and / or merchant groups (as advised by Mastercard from time to time), that meet certain qualifying criteria deemed to be strategic to Mastercard, except for transactions that would qualify for Charities and/or Mastercard Initiated Rewards.

Strategic Merchants 2 Currently available to card present and card not present transactions of merchants and / or merchant groups (as advised by Mastercard from time to time), that meet certain qualifying criteria deemed to be strategic to Mastercard, except for transactions that would qualify for Charities, Mastercard Initiated Rewards and/or Strategic Merchants 1.
Strategic Merchants 3 Currently available to card present and card not present transactions of merchants and / or merchant groups (as advised by Mastercard from time to time), that meet certain qualifying criteria deemed to be strategic to Mastercard, except for transactions that would qualify for Charities, Mastercard Initiated Rewards, Strategic Merchants 1 and/or Strategic Merchants 2.
Other Card Present – Standard Available for all Card Present transactions on Standard products, except for transactions that would qualify for Charities, Mastercard Initiated Rewards and/or Strategic Merchants.
Other Card Present – Premium Available for all Card Present transactions on Premium products, except for transactions that would qualify for Charities, Mastercard Initiated Rewards and/or Strategic Merchants.
Other Card Present – Commercial Available for all Card Present transactions on Commercial products, except for transactions that would qualify for Charities, Mastercard Initiated Rewards and/or Strategic Merchants.
Other Card Not Present – Standard Available for all Card Not Present transactions on Standard products, except for transactions that would qualify for Charities, Mastercard Initiated Rewards and/or Strategic Merchants.
Other Card Not Present – Premium Available for all Card Not Present transactions on Premium products, except for transactions that would qualify for Charities, Mastercard Initiated Rewards and/or Strategic Merchants.
Other Card Not Present – Commercial Available for all Card Not Present transactions on Commercial products, except for transactions that would qualify for Charities, Mastercard Initiated Rewards and/or Strategic Merchants.

Mastercard Debit and Prepaid Purchase with Cashback Rate

  All Products
Group Rate incl. GST
All -AUD 0.175

 

Interchange Category Description
Purchase with Cash Back Available for all Debit and 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.