Understanding Discover Interchange Rates

In simple terms, interchange is the basic cost of completing a credit card transaction. These fees cover the estimated cost of risk associated with a given transaction while also funding the maintenance of card networks, servers, and security infrastructure. 

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What is Interchange?

In simple terms, interchange is the basic cost of completing a credit card transaction. 

These fees cover the estimated cost of risk associated with a given transaction while also funding the maintenance of card networks, servers, and security infrastructure. 

No matter how your provider has priced your payment processing contract, you are paying interchange fees. These fees are non-negotiable, but some business types may qualify for discounted interchange rates.

In this article, we’ll list interchange rates as a percentage of the total transaction amount plus a static amount. For example, if an interchange rate is listed as 1.8% + $0.20, the merchant would pay $2.00 in interchange fees on a $100 transaction.

How are interchange rates determined?

Generally, interchange fees are determined by three main factors:

  • Business type: Payment processors divvy up their customers into different buckets based on the type of product or service they offer. Your rates will change depending on what category you fall into.
  • Transaction environment: Keeping customer information safe is a priority for all processors, so they reward merchants who take measures to protect it. 
  • Card type: If you own a credit card, there’s a good chance there are rewards associated with it. Those rewards are paid for by the merchant as part of the interchange fee. A debit card will incur a much smaller interchange rate than a high-rewards credit card.

Understanding Discover’s interchange fees

Discover is a unique card network. Whereas Visa and Mastercard outsource the issuing of their cards to various banks, Discover tends to issue their cards directly. This means that interchange fees are not split between the issuing bank and the card network, but are instead paid directly to Discover via your payment processor.

As a result, Discover’s interchange fees are much easier to comprehend than their counterparts from Visa or Mastercard. Additionally, Discover gives greater weight to the card type and transaction environment of a given transaction, with the business type being given very little consideration.

You should be aware that Discover does not publish their interchange rates. However, they do make them available to payment processors who accept cards on their network. Below are the most recent interchange charts from Discover. These are accurate as of November 14, 2019, but are subject to change.

Discover credit interchange rates

Discover’s credit card types are divided up into five levels: basic, rewards, premium, premium plus, and commercial. The rates for these levels are as follows.

Card TypeRateBasic (Card Present*)1.56% + $0.10Rewards / Premium (Card Present)1.71% + $0.10Premium Plus (Card Present)2.15% + $0.10Basic (Card Not Present**)1.87% + $0.10Rewards (Card Not Present)1.97% + $0.10Premium (Card Not Present)2.00% + $0.10Premium Plus (Card Not Present)2.40% + $0.10Commercial (All Methods)2.30% + $0.10

*Card Present refers to a transaction in which a physical card is used, either by swiping, dipping, or near-field-communication.

**Card Not Present refers to a transaction in which the card is provided remotely, including online or keyed transactions.

Recurring credit transactions

Discover offers discounted rates for most recurring transactions, such as subscriptions or memberships.

Card TypeRateBasic (Recurring)1.35% + $0.05Rewards / Premium (Recurring)1.35% + $0.05Premium Plus (Recurring)1.80% + $0.05Commercial (Recurring)2.30% + $0.10

Discover debit interchange rates

Because debit cards offer no rewards, the only factor that plays into these rates is how the card is accepted.

Transaction TypeRateCard Present1.10% + $0.16Card Not Present1.75% + $0.20Regulated*0.05% + $0.22

*Regulated debit cards are those which are issued by banks with at least $10 billion in assets. The rate listed here is actually an interchange cap; no processor can charge above this amount in interchange fees.

Recurring debit transactions

Transaction TypeRateDebit (Recurring)1.20% + $0.05Regulated Debit (Recurring)0.05% + $0.22

If you have further questions about Mastercard interchange or if you need help understanding your payment processing statement, the payments experts at SwipeSum are here to help. We take pride in being your outsourced Chief Payments Officer. We’re happy to look over your statement and make sure you’re paying the proper interchange rates. We’ll even take a look at your processor to see if you’re getting the best solution at the lowest rate! Visit us at SwipeSum.com to get started.

Taft Anderson

Taft Anderson is the former Product Marketing Manager of Swipesum. A graduate of Washington University in St. Louis' Olin Business School, Taft is a content and branding expert.

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