Every card swipe divides the purchase price among parties the shopper never sees. The largest slice is interchange, and it explains a good deal of how American retail pricing behaves.
Four parties stand behind one transaction
The cardholder's bank issues the card and carries the credit risk. The merchant's bank, usually called the acquirer, receives the funds and deposits them into the store's account.
Between them sits a network that routes the authorization message and sets the rules. The merchant's payment processor may be a fifth party layered on top of the acquirer.
Each of these takes a share. Interchange is specifically the portion that moves from the acquirer to the issuing bank, and it is the biggest component of what a merchant pays.
Rates vary by card and by how it is used
Networks publish long schedules of interchange categories. A premium rewards card carries a higher rate than a basic debit card, and a card typed into a website costs more than one tapped in person.
The reasoning is risk and cost. Card-not-present transactions produce more fraud and more disputes, so the schedule prices them higher.
Merchant category also matters. Grocery stores and fuel retailers, which run on thin margins and high volume, often qualify for reduced rates that would not apply to a jewelry store.
Rewards are funded by this flow
Points, miles and cash back come out of the issuer's share of interchange. A card offering generous rewards must sit in a higher interchange category to fund them.
This connects two things that look unrelated. The value of a rewards program is ultimately paid by merchants, and through them by prices charged to all customers.
Debit interchange in the United States is capped by regulation for larger issuers, which is why debit rewards largely disappeared after that rule took effect.
Surcharges and discounts make the cost visible
Merchants may add a surcharge on credit transactions in most states, subject to network rules and caps, or offer a discount for cash. The two are economically similar and legally distinct.
Some states restrict surcharging outright, and rules have shifted through litigation over the years. A business operating across state lines has to track those differences.
Where surcharges appear, they usually apply to credit and not debit, because the underlying cost difference is real rather than arbitrary.
Settlement takes longer than authorization
Authorization happens in seconds and only confirms that funds are available. The actual movement of money occurs in batches, typically settling over the following business days.
That gap is why a pending charge can vanish, and why refunds take longer than purchases. The reversal has to travel the same chain backward.