When you settle your transactions each day, the Chase / PaymenTech Network processes and sorts each transaction by card type. The transactions are then sent to their respective card associations (Visa, MasterCard or Discover) through Interchange.

During this process, every transaction is assigned an Interchange category based on industry type and qualification elements e.g. swiped sale or forced sale.  Currently there are over 128 Interchange categories.

Interchange is the system where transactions are submitted for payment from the Acquirer or Merchant Processor to the Card Issuer.  The Card Associations (MasterCard or Visa) establish the rules and manage the Interchange of all transactions.

Interchange levels today cover specific industry accepted methods and risk. For example, "card present" merchants pay less than "card not present" merchants. Corporate cards carry higher Interchange than consumer cards due in part to corporate demands for more detailed reporting levels. Transactions not settled for processing electronically or not in a timely manner carry higher Interchange to cover manual processing or increased chargeback liability. Foreign cards have Interchange fees to cover currency conversion. There are special Interchange categories for emerging markets like quick service restaurants (fast food), utility billing (gas, electric, water, cable) and purchasing cards.  These fees are paid at the time the transaction is exchanged and vary based on processing method utilized.

Interchange and Card Association fees vary in amount based on industry type, the degree to which cards are authorized, and the timeliness of remitting a sale for payment. There are several rates that may apply to your transactions, depending on your method of processing each transaction.  When setting rate qualification criteria, the card associations consider the card product used in the transaction, how the transaction data is entered into the terminal, the time of settlement versus time of authorization.