Understanding UAE Interchange
What are Interchange fees?
Interchange fees are paid by the Acquirer (the merchant’s bank) to the Issuer (the cardholder’s bank) in a purchase transaction. Mastercard does not earn any revenue from interchange fees.
The Acquirer pays the interchange fee to the Issuer as a reimbursement for the costs of enabling a transaction. The costs incurred by the Issuer include, but are not limited to, processing cardholder applications, performing credit scoring, issuing cards, taking responsibility for credit risk and (most) fraud and providing the merchant a guarantee that it will receive the funds for the transaction made by the cardholder.
Our role: What is Mastercard role in recommending Interchange?
Leveraging nearly 50 years of experience, Mastercard defines and recommends domestic interchange rates in over 70 countries around the world at different levels of card payment development. Mastercard also defines and recommends intra-regional and inter-regional interchange rates.
Mastercard balances the needs of all stakeholders, including Issuers, Acquirers, merchants and cardholders, in defining interchange rates. Mastercard takes into consideration many factors, including: the stage of evolution of the market; the degree of acceptance penetration across various sectors; credit, fraud, funding and other costs to the banks; the cost of alternative payment methods.
Mastercard does not earn any revenue from Interchange. The objective in recommending interchange is to maximize electronic payment volumes benefiting all participants in the ecosystem. If interchange rates are too high, Acquirers will not be incentivized to invest in growing merchant acceptance or may raise merchant service fees. If interchange rates are too low, Issuers will not be incentivized to invest in growing card issuance or in new technologies like contactless and may increase cardholder fees and reduce cardholder benefits/rewards.
Interchange Rates in the United Arab Emirates
In line with the requirements of The Central Bank of the UAE, UAE interchange rates recommended by Mastercard can be found here. From time to time, Mastercard will update its UAE interchange rates, and will publish updated rates on this website in line with each rate update. While Mastercard will endeavor to keep the rates and related criteria on the website up to date, please note that it is possible that this website may not be absolutely current in all regards at all times. In the event of any discrepancy between the rates found on this website and the rates officially published by Mastercard to its customers, the official rates and criteria will apply.
How Interchange and Merchant Discount Rate ‘MDR’ are interconnected?
The Merchant Service Fee is a fee paid by the merchant to its Acquiring bank in return for the Acquirer’s service in enabling the merchant to accept card payments. The MSF is not set by Mastercard and is not paid to Mastercard.
MSF is negotiated between the Acquirer and its merchants directly, with no involvement from Mastercard. The fee is influenced by a variety of factors including, but not limited to: the size of the merchant, the merchant’s field of trade and the merchant’s risk profile.
The MSF is paid fully to the Acquirer. The Acquirer uses the revenue it collects from MSF to pay interchange and Network Fees and operational costs and retains the net amount as profit.
We are confident that this website gives you the relevant information needed to understand interchange rates and structure and determine which rates may apply to your transactions. However, we also recognize that this information is being made available to a very diverse audience, with different needs and expectations with various levels of understanding of the card payment universe. Mastercard encourages merchants to speak with their Acquirer or other card acceptance service provider, if they have questions regarding any aspect of interchange rates published by Mastercard, acceptance of Mastercard cards, or their card acceptance agreements.