What is Inter-regional interchange?

Higher, unregulated interchange applied when card and merchant sit in different regions (e.g. US cardholder buying from UK merchant); often 1.15% to 1.65%.

Inter-regional interchange refers to a specific category of interchange fees applied by card schemes when a cardholder's issuing bank and the merchant's acquiring bank are domiciled in different geographical regions, as defined by the respective card scheme.

This fee structure is distinct from domestic or intra-regional interchange and is typically applied when the Scheme Identification field in the authorisation message indicates an issuer from one region (e. g. , North America) and the acquirer's country code indicates another (e. g. , Europe).

These rates are generally higher and less regulated than domestic interchange, often falling within a range of 1.15% to 1.65% of the transaction value, depending on the card product and transaction type.

For merchants, inter-regional interchange manifests as a higher cost component within their acquiring fees, particularly noticeable for businesses with a significant international customer base. Acquirers itemise these fees on merchant statements, often under a specific line item such as "Inter-regional interchange" or "Cross-border Fees."

A specific challenge arises when merchants rely solely on the billing address to determine a transaction's origin; the issuing bank's country, not the cardholder's stated address, is the determinant for inter-regional classification, potentially leading to unexpected higher costs for transactions appearing domestic.