How Mastercard Assigns Interchange Rates and How it Will Affect You

January 13, 2020

In 2020, Mastercard® and some other card brands will introduce interchange updates to support the Government of Canada in lowering the average effective interchange rate to 1.40% (from 1.50%) on domestic consumer credit transactions.

How Mastercard Assigns Interchange Rates

An interchange rate or interchange is an amount that every card processor, like Moneris, is required to pay credit card issuers and/or financial institutions for each credit or debit card transaction processed by their merchants. It is set and regulated by the card brands. Mastercard, for example, currently assigns their interchange rates based on card type, transaction type, business type/Merchant Category Code (MCC), and/or transaction volume.

To reach the 1.40% average, Mastercard will make a significant change to how they assign interchange rates. Effective May 1, 2020, they will assign interchange rates based on the degree of risk associated with each transaction and will eliminate most of their domestic interchange programs that are based on business type/MCC.

What do the Mastercard changes mean for me?

As a result of the major transition in how Mastercard assigns interchange rates, you will see a change in your cost of processing Mastercard transactions. Generally, transactions that leverage secure technology to lower the risk of processing will likely receive lower interchange rates. Higher-risk transactions, such as manually keyed ones, will likely receive higher interchange rates.

For example, card present transactions that require both the card and the cardholder present typically involve contact or contactless technology that is highly secure. Card not present transactions such as ecommerce, telephone, mail, and recurring payments where the card, cardholder, and/or the merchant may not be present do not necessarily have secure technology in place to reduce the risk of fraud. With the new Mastercard interchange rate changes, it is in your best interest to use the most secure ways to process payments.

Overall, the specific rate changes will depend on your business type/MCC, transaction volume, method of acceptance and card mix (types of card).

What if I want more information?

If you have more questions, you can refer to the Interchange 2020 Frequently Asked Questions. In the May updates section, you can also find details about the specific Mastercard interchange updates.

If you are part of simplified pricing, the Mastercard changes will be passed through to you and can be reviewed on your Moneris statement.

Note: there will be changes to the fee and program names in your statement in accordance with the interchange updates. For more details, refer to the official communication you will receive in early January 2020.


The information in this article is provided solely for informational purposes and is not intended to be legal, business or other professional advice or an endorsement of any of the websites or services listed.

Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.

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