A Complete Guide to MasterCard Interchange Rates and Pass-Through Fees

MasterCard is the second-largest credit card provider in the United States. MasterCard offers various benefits to its cardholders, including identity theft protection, no liability for fraud, and emergency card replacement service. Some MasterCard cards also come with special benefits like cashback offers.

Each MasterCard credit card features different interchange rates. These rates will vary surrounding the card type and whether it is keyed or swiped when completing the deal. There are also extra fees involved with each transaction, including some charges that are for getting access to the MasterCard network to accept deals. 

The General Rule of Thumb

Swiped transactions with MasterCard credit cards cost 1.6% to 2.5% plus 10 cents. Keyed transactions will cost 1.9 to 3% plus 10 cents.

The exact total a business will spend on an interchange rate will vary by industry and card type. MasterCard provides various cards that serve multiple unique needs customers may hold.

Look At the Type of Card

MasterCard’s interchange rates vary surrounding the different cards it offers. These include the following cards:

• Standard – For basic purchases
• Gold – Offers travel accident insurance, roadside assistance, and discounts on some programs
• Platinum – Travel assistance support and further deals
• World – For international travel purposes
• World Elite – Includes additional benefits for international travel
• Corporate – For business purposes, including for purchasing different assets for business operations

These cards all come with different benefits for cardholders. But they also have higher interchange rates as one goes across them. The Corporate card has the highest interchange rate, while the basic MasterCard credit card has the lowest rate. The Corporate card’s rate comes from how multiple people in the same business can carry cards that link to the same account. There’s a greater likelihood that people will spend more money with their Corporate cards than if they used other cards to manage their payments.

A traditional MasterCard card will have an average rate of about 1.6% plus 10 cents. A World card will feature a rate of 1.77% plus 10 cents, while a World Elite card has a rate of 2.2% plus 10 cents. A Corporate card will have the highest average rate at 2.7% plus 10 cents.

The high-value cards have more significant rates to cover the expenses associated with offering these benefits to cardholders. People are often more likely to spend extra money with these high-value cards, thus producing more substantial interchange charges.

Different Rates For Many Industries

Some industries will experience lower interchange rates than others. The real estate market is one such example. The interchange rate for a MasterCard real estate purchase is 1.1% plus 10 cents. But the total rises to 2.2% plus 10 cents for a World Elite card and 2.7% plus 10 cents for a Corporate card.

MasterCard has multiple listings for different industries. Business owners can contact MasterCard for details on the specific rates they would spend for their deals.

Charity Rates

MasterCard has set rates for charity donations. The interchange rate for a debit charity payment is 1.45% plus 15 cents. The rate for a credit-based donation is 2% plus 10 cents. The rates work regardless of the type of MasterCard card the donor uses. Regulated debit cards will enjoy a lower interchange rate of 0.05% plus 22 cents.

Debit Card Considerations

MasterCard charges the same interchange fee for traditional debit cards and prepaid debit cards if the card is present. The rate will be 1.05% plus 15 cents.

For keyed transactions, a debit card will have a rate of 1.6% plus 15 cents. The rate increases to 1.76% plus 20 cents for prepaid cards.

Regulated Debit

Some MasterCard debit cards are regulated cards. A regulated debit card is backed by a bank that has at least $10 billion in assets.

Regulated debit cards will have a significantly lower interchange rate. MasterCard’s rate for regulated cards is 0.05% plus 22 cents. The total is the same for present and keyed payments.

Pass-Through Fees

MasterCard also charges pass-through fees for many of its transactions. These include the following fees for handling cards:

• Assessment Fee – 0.13% for orders under $1,000 and 0.14% for orders over that total
• Acquirer License Fee – 0.0045%
• Network Brand Usage Fee – 1.95 cents
• CVC 2 Authorization Fee – 0.25 cents; this is for CNP transactions
• AVS Authorization Fee – 1 cent for each transaction that goes through the Address Verification Service system
• International Payment – 0.85% for processing transactions that go across a border
• Final Authorization Fee – 0.0283%; the fee must be worth at least 4.52 cents

MasterCard will also charge penalties for pre-authorized transactions. Any transaction that goes through before the card can be authorized will experience a penalty of 5.085 cents. Any deal that also has no specific defined authorization effort will cost 5.085 cents to process.

Annual Fee For Each Location

MasterCard charges $15 per year for a business location to access the MasterCard network. The total will increase by $3 for each extra location where MasterCard cards are accepted. Smaller entities will not have to spend as much on this fee, but more massive ones will potentially spend thousands of dollars to accept these cards.

Possible Changes?

MasterCard has expressed it will be increasing its interchange rates in the future. But those increases have been delayed to April 2022. MasterCard was originally planning to increase its rates in April 2020, but the ongoing pandemic forced MasterCard to push them back to 2021. The hikes were delayed once again to 2022 amid concerns about businesses trying to recover from the pandemic.

MasterCard’s various interchange rates show that the company has unique standards for how it will charge retailers for accessing its network. All retailers that wish to accept MasterCard credit cards should note how these rates work when choosing to accept these cards. The rates are sensible for most parties, but the additional fees can interfere with a company’s cash flow and how it can prepare its future revenues. These are points that must be planned well when finding something that fits any needs.