Interchange pricing allows payment firms to generate revenue by charging merchants a fee to process credit card transactions. The interchange fee is acquired by the payment provider from the merchant's acquiring bank each time a customer uses a credit card to make a purchase. The cost of processing the payment and upkeep of the payment infrastructure is covered by this fee, which is typically a proportion of the transaction value.

In addition to the interchange fees, payment companies may also impose additional charges on businesses. These costs may also include a markup or discount rate, which represents the payment company's profit margin. The markup rate is often agreed upon by the payment processor and the merchant or established by the business's pricing policy.

In conclusion, the interchange fees that retailers pay to accept credit card payments are how payment providers make money. They might also include extra costs in their pricing plans for merchants, which boosts their overall profits.