Interchange Fees and Card Rebate Programs Explained

An interchange fee is the per-transaction charge a supplier's bank pays the buyer's card-issuing bank every time a card is used, with the rate set by the card network. That same fee is the pool that funds the rebate a business earns on commercial card spend. The term trips up finance teams because it serves two audiences pulling in opposite directions. On one side sits the merchant or supplier who pays interchange to accept a card. On the other sits the business buyer whose card program earns a rebate paid out of it. Knowing which side of that line you're standing on is the whole game, and most rebate pitches never bother to draw it.

The confusion clears once you see the four-party model, who charges what, and the rate bands that decide how big a rebate can be. Those same mechanics explain the rebate a business actually books, and they settle the question finance leaders distrust most: whether a card program can run without picking a fight with your vendors.

Key Takeaways

• Interchange is paid by the supplier's side of a card transaction, not by the buyer's company, and the card network sets the rate rather than negotiating it deal by deal.

• US merchants paid roughly $187.2 billion in card processing fees in 2024, and interchange is the largest slice of that, according to the Nilson Report.

• For a business that pays suppliers by commercial or virtual card, interchange is the pool that funds the rebate, so a cost on one side becomes revenue on the other.

• Debit interchange is capped under federal law at roughly $0.22 to $0.24 per transaction; credit and commercial-card interchange are not capped, which is why card rebates exist at all.

• A rebate program only works if suppliers actually accept the card, which is a vendor-enrollment problem far more than a pricing one.

• Card isn't always the right rail. ACH or check still wins for some suppliers, and a credible program routes them there instead of forcing the issue.

What is an interchange fee?

An interchange fee is the per-transaction charge that moves from the supplier's acquiring bank to the buyer's issuing bank every time a card is used. The card network sets the rate, the supplier's processor passes the cost along, and the buyer's company pays nothing extra to use the card. US merchants paid roughly $187.2 billion in card processing fees in 2024, up 8.7% year over year, according to the Nilson Report's 2024 study of merchant processing fees, and interchange is the largest component of that total.

The number sounds like a tax on commerce, and merchant-side coverage tends to frame it that way. But interchange isn't a single fee skimmed by one party. It funds several real costs in the payment system, and understanding where it sits among the broader types of card payments is worth doing before you evaluate any rebate pitch.

• The network rails that authorize, route, and settle the transaction in real time.

• The issuing bank's funding cost for extending the line of credit behind the card.

• The risk capital that absorbs fraud and chargebacks during the settlement window.

• The rewards and rebates paid back to cardholders and commercial card programs.

That last bullet is the one that matters most for a business buyer. The rebate a business earns on its card spend isn't conjured out of thin air or subsidized by Corpay. It's a share of interchange, redirected back to the buyer. Hold that thought, because it's the bridge between the cost of accepting a card and the revenue of paying with one.

Who actually pays the interchange fee?

The supplier's side pays the interchange fee, which is the detail most finance teams get backwards. A card transaction runs on a four-party model, and naming the four parties makes the flow obvious instead of mysterious.

• The cardholder, or buyer: the business that holds and uses the card to pay a supplier.

• The issuing bank: the bank that issued the card, extends the credit, and collects interchange.

• The card network: Visa, Mastercard, or another network that routes the transaction and sets the interchange rate.

• The acquiring bank on the supplier's side: the bank and processor that accept the card payment on the supplier's behalf and bear the interchange cost.

When a buyer pays by card, the supplier's acquiring bank collects the payment, keeps a small acquirer markup, and the interchange portion flows to the issuing bank. The buyer's company never sees a line item for it. That's why the common complaint about vendors "passing interchange back" as a surcharge is really a story about a supplier deciding not to absorb a cost that's normally theirs to carry.

You can hear that exact tension in how AP teams talk about it. One controller on r/Accounting described the moment plainly: "Smaller vendors started passing interchange fees back." Another recounted a rebate pitch that fell apart on contact with reality, where a "VP told the organization we could get $1 million a year in rewards. However, vendor banks would charge fees to process. Big vendor was tacking a 3% convenience fee on invoices." The mechanics behind that flow are the same ones that make B2B virtual card payments work, and they're worth getting right before you decide whether a vendor's surcharge is a dealbreaker or just a negotiation.

How much are interchange fees, on average?

Interchange rates depend on the card type, and the spread is wide enough to change the entire economics of a payment decision. Regulated debit is capped by federal rule, credit is not, and commercial cards sit at the high end precisely because they carry the richest rebates. For every $100 in card payments accepted in 2024, merchants paid about $1.57 in fees, and the average Visa and Mastercard credit swipe rate rose to 2.35%, according to the Nilson Report's 2024 figures. Visa and Mastercard credit-card swipe fees alone totaled $111.2 billion in 2024, up from $100.8 billion the year before, per the same Nilson data cited in coverage of the networks' antitrust settlement.

The table below pulls the bands together. Read it top to bottom and the logic of rebates falls into place, because the cheaper the rail, the smaller the interchange pool, and the smaller any rebate it could ever fund.

Rate bands shown are typical published ranges; exact interchange depends on card program, transaction qualification, and network category.

The pattern is the part to remember. Debit costs a fraction of credit because federal rule caps it. Commercial and B2B virtual cards run highest, which is exactly why they can fund a rebate that consumer debit never could. Visa standardized its B2B virtual-payment interchange to 2% under its October 2025 interchange schedule update, which gives the commercial-card category a clearer floor than it had a few years ago. When a finance team weighs whether to move payables onto cards, this table is the starting math, not a rounding detail.

How does interchange work in a card transaction?

Interchange is applied during the behind-the-scenes movement of money that follows every card payment, in three stages that each carry a reason the fee exists. The transaction runs through authorization, then clearing, then settlement, and the buyer experiences none of it beyond an approval.

1. Authorization: the issuing bank confirms the card is valid and the funds or credit are available, then approves or declines in real time, usually in under two seconds.

2. Clearing: the transaction details pass between the acquiring and issuing banks through the network, the purchase is matched to the authorization, and the interchange fee is calculated based on the card type and how the transaction qualifies.

3. Settlement: the actual funds move, the supplier's account is credited net of fees, and the interchange portion lands with the issuing bank.

Why does each stage matter to a buyer evaluating a card program? Authorization is the guarantee. The moment the issuing bank approves a transaction, it has committed to paying the supplier even if the buyer never settles up or the card later proves fraudulent, and that promise is part of what interchange buys.

Clearing is where the rate gets set, which means the qualification rules that govern clearing are the rules that govern how much rebate the spend can generate. Settlement is where timing lives. The gap between when a supplier gets paid and when the buyer's card statement comes due is the float that makes a card payment a working-capital tool, not just a way to move money. A supplier gets paid quickly and reliably, the buyer holds cash longer, and both sides get something, which is the only reason the model survives.

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What is interchange-plus pricing?

Interchange-plus is a pricing model where a supplier's processor charges the actual network interchange rate plus a fixed, disclosed markup. It's the most transparent way to price card acceptance, because the buyer can see exactly what the network charged versus what the processor added on top. The two numbers are stated separately rather than blended.

The alternative is flat or tiered pricing, which bundles everything into one rate that hides the split. Tiered pricing sorts transactions into "qualified," "mid-qualified," and "non-qualified" buckets that the processor defines, and the definitions usually favor the processor. A finance team negotiating card acceptance on the supplier side should ask for interchange-plus by name, precisely because it makes the processor's markup visible and therefore negotiable. You can't push back on a number you can't see.

Are interchange fees regulated?

Debit interchange is regulated; credit interchange is not. The Durbin Amendment to the Dodd-Frank Act directed the Federal Reserve to cap debit interchange for large issuers, which is the reason debit costs a fraction of credit. Under the Fed's Regulation II, a covered issuer's debit interchange is capped at $0.21 plus 0.05% of the transaction plus a $0.01 fraud-prevention adjustment, and the 2023 average covered debit interchange landed around $0.22 to $0.24 per transaction, according to the Federal Reserve's Regulation II data and its 2023 interchange fee revenue report.

Credit and commercial-card interchange remain uncapped under US federal law. That gap is not an accident of history, it's the structural reason commercial-card rebates can exist at all. A capped fee leaves nothing to share back.

The rates aren't frozen, though. A revised Visa and Mastercard settlement reached in November 2025 would lower swipe fees by 0.1 percentage point for five years, a change projected to save merchants about $29.79 billion, according to CNBC and Daily Record reporting on the roughly $38 billion antitrust settlement. For a business buyer, a small reduction in credit interchange trims the supplier's cost of acceptance, which can make a reluctant vendor easier to bring onto a card. It nudges the math at the margin without changing the basic structure.

How do interchange fees fund B2B card rebates?

A B2B card rebate is funded by interchange, paid back to the buyer out of the same fee the supplier's side already absorbs. When a business pays suppliers with a commercial or virtual card, the issuing bank collects interchange and shares a portion of it back to the buyer as a rebate. Nothing is charged to the buyer's company to make this happen, which is the single point most rebate pitches fail to explain clearly. Our deep dive on how virtual-card rebates turn AP spend into revenue covers the program mechanics in full, and the table below shows who sits where in the flow.

That Reddit anecdote about the missing $1 million in rewards usually comes down to this table being misread. The rebate was real. What broke was the assumption that every supplier would accept the card without friction, and that none of them would surcharge to recover their interchange. Both halves of that assumption are where a program lives or dies, so they're worth taking one at a time.

How much can a business earn in card rebates?

A business typically earns a B2B card rebate somewhere in the range of roughly 1% to 2% of the spend it routes through the card, and the figure scales with payables volume rather than landing on a flat rate. The yield comes out of the interchange band on commercial and virtual cards, so it tracks the rate table above. Cards in the 2% to 3% interchange range leave room for a meaningful share to flow back to the buyer after the program and issuer take their cut. The more spend a company moves onto cards that suppliers actually accept, the larger the absolute rebate, which is why high-volume payers treat card acceptance as a revenue line rather than a convenience.

The honest version of this math has a few moving parts, and the headline percentage is the least important of them. What actually decides the dollar figure:

• Addressable spend: only the portion of payables that runs through accepting suppliers earns anything. A company with $50 million in annual payables but 30% card-accepting vendors is working from a $15 million base, not $50 million.

• Card mix: commercial and virtual cards sit in the richest interchange band, while a consumer debit card would earn nothing because Regulation II caps it.

• Program structure: rebate tiers, payment timing, and whether the program is managed end to end all move the realized yield up or down.

Structure matters more than the advertised rate, and our breakdown of maximizing total return on card spend walks through how to model it for your own volume. That base keeps widening, too. The B2B segment led the virtual-cards market at roughly 70.3% of revenue share in 2024, according to Grand View Research's virtual cards market report, as more payables shift onto virtual cards each year. One caution is worth stating plainly, though. A 1.5% rebate on spend you can't actually move onto a card is a 1.5% rebate on zero. The percentage is the easy part; enrollment is the hard part, and it's where most programs underdeliver against the slide deck.

How do you run a card rebate program without alienating vendors?

You run it by solving the acceptance problem honestly rather than pushing every supplier onto a card and hoping. The objection finance leaders raise here is legitimate, not a marketing obstacle to talk past. Some suppliers refuse cards outright. Others accept but add a surcharge to recover the interchange, which erases the buyer's gain and sours the relationship in the process. The same Reddit thread that flagged the surcharge problem also captured the deeper fear: "Moving ownership of key relationships outside the organization is never a good idea," and "these AP automation systems in theory sound good, but it just tries to put that work onto your vendors."

That fear is the thing to address, because it's correct about badly run programs. A program that blasts every vendor with a card-acceptance request and treats a "no" as the vendor's problem will damage relationships and underdeliver on rebate. The fix is managed vendor enrollment that decides whether a card program succeeds: reaching suppliers who already accept cards, setting acceptance terms before the first payment, and not strong-arming the ones who won't budge. A large accepting-vendor network is the practical answer to "our suppliers won't take cards," because a meaningful share of them already do somewhere else.

For the suppliers who genuinely shouldn't be on a card, the right move is to route them to a cheaper rail, not to push harder. The cost case for moving them off paper holds up independent of any rebate. The median cost to issue a check runs $2.01 to $4.00 versus $0.26 to $0.50 for an ACH payment, according to AFP's 2022 Payments Cost Benchmarking Survey, so shifting a card-averse supplier from check to ACH still cuts cost even when no rebate is involved.

Paper hasn't disappeared either, which is why this matters. About 26% of US and Canada B2B payments were still made by check in 2025, while virtual-card adoption reached 23% of organizations, according to AFP's 2025 Digital Payments Survey. A credible program reads that split and routes accordingly, handling the non-card suppliers through supplier payments automation instead of forcing every vendor into the same lane. Cards earn the rebate, ACH and check carry the rest, and that division isn't a compromise so much as the design.

Turn AP card spend into rebate revenue with Corpay

The hardest part of a card rebate program isn't the rebate. It's getting enough of your spend onto accepting suppliers without the vendor blowback the Reddit threads describe so vividly. That's the exact gap Corpay is built to close, and it's where the rebate stops being a slide and starts being a line on the P&L.

Corpay runs commercial and virtual card payments as a managed program for more than 800,000 businesses, so the interchange that funds rebates actually reaches your bottom line instead of stalling on supplier refusals. Our team handles supplier enrollment directly, reaching the vendors who accept cards, setting acceptance terms up front, and routing the rest to ACH or check. A network of more than four million accepting vendors is the difference between a program that looks good in a pitch and one that lands, because many of the suppliers you'd assume "won't take cards" already accept them across that network. As Mastercard's #1 commercial B2B issuer, we have the issuing volume to fund a rebate worth defending to your CFO, and the result is a payables operation where card spend earns return rather than leaking it. Corpay's commercial card program handles the rebate engine, while Corpay AP automation handles the supplier enrollment and reconciliation that make the rebate real.

That reconciliation matters because rebate revenue is only clean if it lands back in your ledger without manual rework, which is why the platform connects to your accounting system through 180+ ERP integrations rather than asking your team to re-key anything. Pairing the card program with disciplined card program cash-flow management is what keeps the return compounding instead of plateauing. Interchange stops being a cost your suppliers complain about and becomes a line of revenue your business books.

Frequently Asked Questions

What are interchange fees?

Interchange fees are per-transaction charges paid by the supplier's acquiring bank to the buyer's card-issuing bank on every card payment. The card network sets the rate. The fee compensates the issuing bank for funding the transaction, guaranteeing settlement, and absorbing fraud risk during the clearing window.

Who pays interchange fees?

Interchange fees are paid by the supplier's side, through their acquiring bank and processor, not by the buyer's company. The buyer pays nothing extra to use the card. When a supplier adds a surcharge, they're choosing to pass back a cost that's normally theirs to absorb.

What is the average interchange fee in the US?

It varies by card type. For credit cards in 2024, merchants paid about $1.57 in total fees per $100 accepted, with the average Visa and Mastercard credit swipe rate at 2.35%, according to the Nilson Report. Regulated debit is far lower because federal rule caps it near $0.22 to $0.24 per transaction, while commercial cards sit at the higher end, which is what lets them fund a rebate.

What is interchange-plus pricing?

Interchange-plus pricing charges the actual network interchange rate plus a fixed, disclosed processor markup, stated as two separate numbers. It's the most transparent model because the buyer can see the interchange and the markup independently, unlike flat or tiered pricing, which blends everything into one rate that's harder to negotiate.

Are credit card interchange fees capped?

No. Credit card interchange isn't capped under US federal law. Only debit interchange for large issuers is capped, under the Durbin Amendment and the Federal Reserve's Regulation II. That uncapped credit interchange is part of what makes commercial-card rebates possible in the first place.

How are virtual card rebates funded?

Virtual card rebates are funded by interchange. When a business pays a supplier by virtual card, the issuing bank collects interchange and shares a portion back to the buyer as a rebate. The buyer's company isn't charged a separate fee to earn it.

When is ACH or check a better choice than a card?

ACH or check is the better rail when a supplier won't accept a card or surcharges enough to erase the rebate. Moving that supplier from check to ACH still cuts cost, since a check runs $2.01 to $4.00 to issue versus $0.26 to $0.50 for ACH, according to AFP's 2022 Payments Cost Benchmarking Survey. A well-run program uses cards where they earn and cheaper rails where they don't.

David Luther

Product Marketing Program Manager

David Luther, MBA is a product marketing program manager with years of experience in commercial banking, finance, and technology sectors, with research and writing appearing in financial publications.

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