1. What Are Credit Card Swipe Charges?
Also known as interchange fees, these are charges applied every time a credit card transaction occurs. The card network decides the fee, covering costs like:
- Payment infrastructure maintenance
- Fraud prevention
- Operational expenses
2. How Do Swipe Fees Work?
When you swipe your credit card at a POS machine, a verification process starts:
- The POS terminal verifies your card details.
- The info is sent via the payment gateway & processor.
- The card network forwards it to your issuing bank.
- The bank approves the transaction, and it’s complete!
3. Who Pays the Swipe Fee?
- Mostly, merchants pay the swipe charges.
- However, in some cases, the issuing bank may charge additional fees to users.
- RBI regulates these charges to ensure fairness & transparency.
4. Impact of Swipe Charges on Card Users
Although merchants pay, these fees may indirectly affect customers:
- Higher product prices – Some merchants increase rates to cover costs.
- Additional hidden fees – Some banks may add charges on certain transactions.
5. Why Should You Know About Swipe Charges?
- Smart Spending: Helps you decide when to use a credit card vs. cash.
- Total Cost Awareness: Understand the real cost of a transaction beyond just the product price.
- Better Negotiation: Business owners can negotiate lower processing fees with banks.
- Maximizing Rewards: Ensure your rewards outweigh swipe charges for cost-effective use.
- Tracking Expenses: Regularly check statements for unexpected charges & plan finances accordingly.