Interchange revenue: What is it and how do you optimize it?

Discover what you need to know to optimize interchange revenue.

July 3, 2024
 ·  6 minutes


Interchange revenue is a way for businesses to make money by receiving part of the interchange fee from card transactions with their issued cards. Whether cards are used for safe and secure supplier payments or to streamline spend/expense management, the transaction volume of these cards generates interchange revenue, opening up a new way for businesses to make money. 

To make the most of this opportunity, you must set up your card program the right way and optimize your interchange revenue.

In this blog, you’ll discover:

  • What is interchange?

  • What is interchange revenue?

  • How to calculate interchange revenue

  • Setting up the right card program

  • Optimize your interchange revenue with Adyen

What is interchange?

Understanding how interchange fees work is essential before diving deeper into interchange revenue. Every time a transaction is made via a card scheme (Visa, Mastercard, etc.), the merchant’s bank (acquiring bank) pays the issuing bank (also known as the cardholder’s bank) an interchange fee. The issuing bank receives this money to cover costs for the issuing bank to facilitate a safe and successful payment. For a full explanation, check out this blog post.

The different payment card processing fees in the payment value chain.

What is interchange revenue?

Interchange revenue is a portion of the interchange fee that businesses can receive if they issue cards. The issuing bank will pay the business part of the interchange fee when payments are processed on cards that the business has issued. This opens up a new income stream for your business.

How to calculate interchange revenue

The percentage of interchange revenue you make depends on your agreement with the issuing bank and can vary for different reasons. One example is that the percentage might be based on your total processing volume. How much interchange revenue you earn also depends on the total interchange fees charged. These fees can change based on several factors, such as:

  • Whether the card is credit, debit, or prepaid.

  • Whether the card is used online or in-store.

For example, credit cards usually have higher fees than debit cards, and online payments often have higher fees than in-person payments. Find more about what affects interchange fees here.

Setting up the right card program

Setting up your card program correctly is the first step to optimizing interchange revenue. This means selecting the right network (like Mastercard or VISA) and considering details like the BIN range and whether the card is for commercial or consumer use. This is important to take into account as some cards, specific BIN ranges, and business cards can be more expensive to accept.

Selecting the best solution among banks, issuers, and fintech providers can also be challenging. Many businesses use providers that rely on third parties or banks to set up their card programs, but this often leads to unforeseen challenges. Working with multiple parties increases the risk of errors and adds extra costs for managing these agreements. Banks have the necessary licenses for issuing cards, but their outdated technology makes integration difficult. This results in long, inflexible integration processes with limited customization options.

Optimize your interchange revenue with Adyen

Optimizing your interchange revenue starts with setting up your card program the right way. At Adyen, we simplify this process by providing a comprehensive banking license and robust tech infrastructure, eliminating the need to juggle multiple partners and providers. This allows you to dedicate more time to refining your interchange revenue strategy.

Most providers work with third-party banks for their issuing licenses. This means that both the issuing provider and the third-party bank will receive part of the interchange, reducing the amount you receive. Adyen ensures no third-party dependencies in interchange share negotiations. Our direct contract with you offers greater flexibility in establishing interchange agreements.

With hundreds of card products available across various industries, our experts will help you choose the ones that best align with your business objectives to optimize your interchange revenue. Interested in learning more about how Adyen can support your business with issuing and interchange? Contact our experts today.

Fresh insights, straight to your inbox

By submitting your information you confirm that you have read Adyen's Privacy Policy and agree to the use of your data in all Adyen communications.