Definition
Interchange Fee – A fee paid by a merchant's bank to a cardholder's issuing bank each time a debit or credit card is used, set as a percentage of the transaction value plus a small fixed amount, with rates set by the card network (Visa, Mastercard). For a card-issuing fintech, interchange is often the single largest revenue source, since it's earned every time a member spends without the company charging the member directly. Found In: Income Statement, Notes to Financial Statements (revenue recognition)