It's the base expense of each credit card transaction.

There are many companies involved whenever you process a credit card or debit sale. First, there is the acquiring bank, who Vada Pay represents. Juris Payments and is referred to as a MSP or a Merchant Service Provider. The Merchant Service Provider represents you, the merchant. Secondly, there is the card-issuing bank. The card-issuing bank represents the customer, and is the bank who issued the credit card to the customer who’s paying you. The final entity is the credit card association, such as Visa, MasterCard, or Discover. They are responsible for setting the relationships from the Issuing bank all the way to the MSP.

For every credit/debit card that exists, there is a pre-set rate that the MSP pays to the issuing bank. This rate is known as the Interchange rate. These rates correlate with the cost that each bank has for these cards. Typically, cards with more “perks” or “extras” will have higher associated Interchange rates, because the card-issuing bank has additional costs to recoup. (Think rewards, points, or airline miles.) Other cards are very cheap to process, and thus, have lower interchange rates. (Think debit cards – this is essentially taking money from a checking account, and are low-risk transactions for a bank.) These Interchange rates apply to all Merchant Service Providers, from the largest providers to the smallest. We all have the same Interchange costs.