// GLOSSARY -- PAYMENTS & FINTECH

What is Interchange Fee?

1 min read Updated

An interchange fee is the charge that a merchant's bank pays to the cardholder's bank for each card transaction — a major cost of traditional payments that crypto transactions can significantly reduce.

WHY IT MATTERS

Interchange fees are the hidden tax on commerce: 1.5-3.5% of every card transaction goes to banks and payment networks. This costs merchants hundreds of billions annually, raising prices for all consumers.

Crypto payments eliminate interchange: a blockchain transaction has a flat gas cost (cents on L2) regardless of payment size. A $10 payment and a $10,000 payment cost the same to process.

This fee structure makes crypto particularly attractive for: high-value transactions, international payments, and markets with thin margins where 2-3% processing fees significantly impact profitability.

FREQUENTLY ASKED QUESTIONS

How much are interchange fees?
1.5-3.5% per transaction in the US, varying by card type and merchant category. In Europe, regulated to 0.3% for credit, 0.2% for debit. Globally, interchange is a $100B+ annual cost.
Do crypto payments have fees?
Gas fees (network cost) only — typically cents on L2 networks. No interchange, no processor fees beyond the payment service's margin. Total cost is dramatically lower than card payments.
Will crypto replace card payments?
Not entirely in the near term. Cards offer consumer protections, rewards, and universal acceptance. But crypto payments are growing for specific use cases where fee savings matter most.

FURTHER READING

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