What is the wholesale rate in card processing?
The wholesale rate is the cost of a card payment before any provider margin: interchange paid to the issuer plus scheme fees paid to the card network. Every acquirer pays it. The merchant discount rate equals the wholesale rate plus the markup of the acquirer, PSP or PayFac.
In detail
The wholesale rate is the cost of a card payment before any provider adds its margin. It is made of two parts: interchange, paid to the card issuer, and scheme fees, paid to the card network. Every acquirer pays these costs, whatever its size.
Wholesale rate vs MDR
The merchant discount rate is the wholesale rate plus the markup of the acquirer, PSP or PayFac. With IC++ pricing, the merchant sees the wholesale rate on its statement. With blended or tiered pricing, it is hidden inside one rate.
Why it varies
- Card type: consumer debit is cheapest, commercial and premium credit cost more.
- Geography: domestic payments cost less than cross-border ones.
- Channel: in-store payments are often cheaper than online ones.
Operators lower their wholesale rate through routing and local acquiring, not through negotiation, because interchange and scheme fees are set by the networks. See What Is the Merchant Discount Rate (MDR)? and how analytics dashboards help follow costs.