<P> Interchange fees are set by the payment networks such as Visa and MasterCard . </P> <P> In the US, card issuers now make over $30 billion annually from interchange fees . Interchange fees collected by Visa and MasterCard totaled $26 billion in 2004 . In 2005 the number was $30.7 billion, and the increase totals 85 percent compared to 2001 . </P> <P> The origins of the interchange fee are a matter of some controversy . Often they are assumed to have been developed to maintain and attract a proper mix of issuers and acquirers to bank networks . Research by Professor Adam Levitin of Georgetown University Law Center, however, indicates that interchange fees were originally designed as a method for banks to avoid usury and Truth - in - Lending laws . Typically, the bulk of the fee goes to the issuing bank . Issuing banks' interchange fees are extracted from the amount collected by the merchants when they submit credit or debit transactions for payment through their acquiring banks . Banks do not expect to make a significant amount of money from late fees and interest charges from creditworthy customers (who pay in full every month), and instead make their profits on the interchange fee charged to merchants . </P> <P> Interchange rates are established at differing levels for a variety of reasons . For example, a premium credit card that offers rewards generally will have a higher interchange rate than do standard cards . Transactions made with credit cards generally have higher rates than those with signature debit cards, whose rates are in turn typically higher than PIN debit card transactions . Sales that are not conducted in person (also known as card - not - present transactions) such as by phone or on the Internet, generally are subject to higher interchange rates, than are transactions on cards presented in person . This is due to the increasing risk and rates of fraudulent transactions . It is important to note that interchange is an industry standard that all merchants are subject to . It is set to encourage issuance and to attract issuing banks to issue a particular brand . Higher interchange is often a tool for schemes to encourage issuance of their particular brand . </P>

What is the interchange rate for visa/mastercard