Managing Credit

What are Credit Card swipe fees?

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Last updated date: Jan 10, 2026

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Credit Card swipe charges are what you pay when you use your Credit Card at a merchant establishment. While this transactional tool has become a must-have these days, it comes at a cost. Understanding how Credit Cards work and the charges associated with them is crucial, so that you can make better financial decisions and save money, especially if you are a regular spender. Let’s break down Credit Card swipe fees.

What are Credit Card swipe charges?

As the name suggests, Credit Card swipe charges are charges for swiping your credit card. Whenever you make any offline purchase and pay through a Credit Card, the merchant swipes your card through the Point of Sale (POS) machine. The charges associated with the same are called Credit Card swipe machine charges.

Understanding Credit Card swipe charges

Another name for Credit Card swipe fees is interchange fees. It is applicable whenever you make a transaction using a Credit Card. The swipe machine charges are determined by the card network and are one of the critical aspects of the Credit Card industry. It basically covers the operational costs associated with Credit Cards like fraud prevention, security, processing transactions, and maintenance of smooth infrastructure. This helps facilitate secure and smooth financial transactions between banks, merchants, and customers. Here are the different components of a Credit Card transaction:

1) Acquiring bank
It is the financial institution where the merchant has its account and will be receiving the payment authorisation from the payment processor. It credits the bank account of the merchant with the transaction amount after deducting the swipe machine charges and debits the same from the issuing bank.

2) Credit Card network
Networks like Visa, MasterCard, etc. are where the Credit Card system revolves. These networks establish the swipe charges.

3) Issuing bank
It is the bank that has issued the Credit Card to the customer. It pays the acquiring bank on behalf of the cardholder and later bills the customer.

4) Payment gateway
It is a digital portal that facilitates the transfer of transaction information from the merchant to the acquiring bank.

5) Payment processor
It is a third-party service provider that manages the transfer of transaction information across various networks. It verifies the transaction details, determines the availability of funds, and communicates the denials and approvals to the merchant.

Advantages of knowing Credit Card swipe fees

Following are some of the key advantages of knowing the Credit Card swipe fees:

Informed decision-making: Knowing the Credit Card swipe charges helps you make informed decisions relating to the usage of Credit Cards.
Comprehension of total costs: Swipe charges form part of your total costs as they are an expense. Therefore, if you wish to comprehend total costs, it is important to know swipe charges.
Negotiating better rates: If you are a business owner, you can negotiate better rates with your service provider if you know the swipe machine charges beforehand.
Enhancing reward benefits: Credit Cards are synonymous with rewards. You can compare swipe charges and the related rewards to enhance your effective reward benefits.
Avoiding surprises in billing statements: If you don’t check Credit Card swipe charges beforehand, it can come as a surprise in your bill statement. To avoid this and end up paying hefty charges, it is better to check swipe charges.

Also Read: 14 different types of Credit Card charges & fees

Who pays the swipe charges?

Usually, the merchants bear the swipe machine charges. However, in certain cases, the issuing bank may also impose swipe charges on the customers. Review the associated terms and conditions on these charges.

The cost of swipe charges

Swipe machine charges may vary across different providers. It usually ranges between 2%-3% of the transaction value. It is important to be aware of these potential charges before making any financial decisions.

Impact of swipe charges on customers

While the swipe charges are borne by merchants, they can also affect customers. The merchants may increase product prices marginally to cover swipe charges. In case the issuing bank charges customers, then swipe charges are borne by customers.

How are swipe charges applied?

Swipe charges are based on the transaction value. A swipe charge is basically a flat rate that is applied to the transaction value. After you swipe your card on the POS terminal, it reads your card information. The information passes through the gateway and processor and reaches the Credit Card network. The issuing bank verifies the information and communicates the denial or approval.

How are we charged when swiping Credit Cards?

The Credit Card company includes the charges in the billing statement issued to you for the relevant quarter. You have to pay it along with the bill itself, ensuring timely payment and avoiding additional fees.

Choosing the right Credit Card

To avoid hefty fees and charges while enjoying loads of rewards and benefits, it is crucial to get the right Credit Card. Axis Bank Credit Cards have remained popular amongst people for their best services, transparent terms, low charges and a truckload of rewards. With multiple options available, you are free to choose the one that best suits your needs. Check out Axis Bank Credit Cards now!

FAQs

Is there any charge for a Credit Card swipe?

When you swipe your Credit Card for purchases, there are usually no direct charges for the customer. However, some merchants may pass on the merchant discount rate (MDR) fee to you, particularly for smaller transactions or at locations that explicitly state such a policy. So, while credit card swipe charges aren’t typical for consumers, it's always good to check with the merchant for any additional fees before making a transaction.

How much are Credit Card swipe fees?

For merchants, credit card swipe rates, or Merchant Discount Rates (MDR), typically range from 1% to 3% of the transaction value. Credit Card swipe fees in India vary based on factors like the card network, whether the card is a credit or debit card, and the transaction amount. While most merchants absorb these costs, some may choose to transfer them to customers, especially for smaller purchases or in cases where they have a clear policy on such charges.

How to swipe a Credit Card without charges?

As a customer, there is no mandatory swipe fee on using your Credit Card. To avoid unexpected charges, check whether the merchant adds an extra fee to cover the MDR. You can also look for cashback offers or opt for no-cost EMI plans to minimise overall costs.

Disclaimer: This article is for information purpose only. The views expressed in this article are personal and do not necessarily constitute the views of Axis Bank Ltd. and its employees. Axis Bank Ltd. and/or the author shall not be responsible for any direct / indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information. Please consult your financial advisor before making any financial decision.