Who actually sets
interchange — and why
merchants aren't in the room

Ask most merchants who sets the cost of accepting a credit card and they will point to their processor. That's the wrong answer, and it's an expensive one to get wrong — because the processor is the one part of the chain you actually can negotiate. The rate that makes up 70–90% of your effective cost, interchange, is set somewhere else entirely, by parties who never once ask a merchant what they think is fair.

Who actually publishes the rate

Interchange schedules are written and published by the card networks — Visa and Mastercard — not by your bank, not by your processor, and not by any body with merchant representation. Visa publishes its USA Interchange Reimbursement Fee schedules as a public PDF; Mastercard publishes its own U.S. interchange rate tables the same way. Both networks revise these schedules on a predictable cadence — typically every April and October — adding new rate tiers for specific card products (small-ticket, supermarket, e-commerce, fuel, healthcare, and dozens more), adjusting existing ones, and occasionally retiring categories.

Each rate tier is a specific combination of variables: card type (debit, credit, prepaid), card product (standard, rewards, signature, infinite/world elite), merchant category code, transaction channel (card-present vs card-not-present), and whether the transaction meets certain data requirements (AVS match, Level 2/3 data, etc.). A single network schedule can run to hundreds of line items. None of them are drafted with merchant input, and none of them are published as a proposal — they are published as the rate, effective on a stated date.

The issuing bank's role — and why it isn't "setting" anything

The bank that issued your customer's card — Chase, Bank of America, a regional bank, a credit union — is the party that actually receives the interchange fee. It's compensation to the issuer for extending credit, absorbing fraud risk, and funding the rewards program printed on the card. But the issuing bank does not set its own rate. It accepts whatever rate the network assigns to that card product under network rules it agreed to when it joined the network. A bank that wants a higher-margin card offers its cardholders more rewards, which network rules place in a higher interchange tier — richer rewards cards cost merchants more precisely because the issuer is funding more customer benefits through interchange. The bank chooses the card product; the network sets the price for that product.

Why merchants and acquirers have no negotiating seat

This is the part that surprises most business owners: interchange is not a negotiated price. It is a unilaterally set network rate that applies identically to every acquirer and every processor routing a transaction through that network. Your processor cannot get you a "better interchange rate" any more than a gas station can get you a better price on crude oil — the input cost is fixed upstream, and no amount of processor-shopping changes it.

What you're actually negotiating when you shop processors is never interchange. It's the markup stacked on top of it.

A processor's real product is everything added to interchange: the assessment fees the network charges, and the processor's own margin. That's the entire logic behind interchange-plus pricing — it separates the fixed, non-negotiable interchange cost from the one number that actually is negotiable, so a merchant can see exactly what they're paying a processor to do versus what they're paying the network and the issuing bank regardless of who processes the transaction. A flat-rate quote blends all three into one number specifically so that distinction disappears.

Acquirers and processors sit downstream of this system by design. The card networks operate a four-party model — cardholder, merchant, acquirer, issuer — with the network itself setting the terms all four parties operate under. Merchants and acquirers are members of the network's rules, not co-authors of them. That's true whether you process $5,000 a month or $50 million.

The Durbin Amendment: the one place regulation does intervene

There is exactly one meaningful exception to "the network sets it and nobody negotiates it": debit interchange from large banks, capped by federal law. The Durbin Amendment to the 2010 Dodd-Frank Act directed the Federal Reserve to write Regulation II, codified at 12 CFR Part 235. It caps debit interchange for issuers with more than $10 billion in total assets at 21 cents plus 0.05% of the transaction amount, with an additional 1-cent fraud-prevention adjustment available to issuers that meet the Fed's fraud-prevention standards. On a $38 transaction — roughly the U.S. average ticket — that works out to about 23.9 cents total.

Two things matter for merchants here. First, this cap applies only to debit, never credit — there is no federal ceiling on credit card interchange in the United States, full stop. Second, the cap applies only to "covered" issuers above the $10 billion asset threshold. Debit cards issued by smaller community banks and credit unions are statutorily exempt, and their interchange is set by the same unregulated network-schedule process as every credit card. In practice this means two debit cards that look identical at your terminal can carry meaningfully different interchange depending purely on which bank issued them — a distinction no merchant can see or control at the point of sale.

This regulatory gap is also why debit routing matters: Durbin's companion requirement forces most debit cards to support at least two unaffiliated networks, giving merchants some ability to route transactions toward the lower-cost option — the one piece of the interchange chain where a merchant's processor actually has room to act on their behalf.

Where MidPay's own rate fits into this

None of this is abstract when you're reading a MidPay statement. MidPay's published simple pricing is 1.49% on debit and 2.69% on credit — an all-in rate that already bundles pass-through interchange, network assessments, and MidPay's markup into one number, structured so the debit rate reflects the fact that most debit interchange is capped and cheap while credit interchange is not. Compare that to a typical flat-rate processor charging 2.6% + 10¢ on everything regardless of card type — on the same volume that gap commonly runs $378 a month, or roughly $4,536 a year, almost entirely because flat rate charges the expensive-card rate on cheap debit swipes it shouldn't. MidPay does not set interchange and cannot discount it — no processor can. What MidPay controls, and what you're actually buying when you choose a processor, is the markup layered on top and how transparently it's disclosed.

Frequently asked questions

Who sets interchange rates?

Visa and Mastercard set interchange unilaterally and publish rate schedules twice a year, typically each April and October. Issuing banks receive the interchange; merchants, acquirers, and processors have no seat in setting the rate itself.

Can merchants negotiate interchange?

No. Interchange is a fixed, published network rate applied to every transaction of a given card type. What merchants can negotiate is the processor's markup layered on top of interchange — which is exactly what interchange-plus pricing makes visible.

What is the Durbin Amendment debit interchange cap?

Under Regulation II (12 CFR 235), debit interchange from banks with more than $10 billion in assets is capped at 21 cents plus 0.05% of the transaction, plus a 1-cent fraud-prevention adjustment if the issuer qualifies. Debit cards issued by smaller banks and credit unions are exempt from the cap.

Why is MidPay's rate different from interchange?

MidPay's published rates (1.49% debit, 2.69% credit) are the full price a merchant pays, made up of pass-through interchange plus network assessments plus MidPay's markup. Interchange itself is a Visa/Mastercard-set number MidPay does not control and cannot discount.

Does credit card interchange have a federal cap like debit does?

No. The Durbin Amendment and Regulation II regulate debit interchange only. Credit card interchange in the United States has no federal price ceiling and is set entirely by Visa and Mastercard's published network schedules.