Interchange fees in Singapore: How they work & ways to reduce them

Key takeaways:

• When you accept card payments in Singapore, you pay interchange fees to your customer's bank. Singapore doesn't cap these fees, and the card networks set the rates.

• Interchange fees vary by card type, where the card was issued, and how the payment was made. Credit and corporate cards usually cost more than debit and consumer cards, and online payments cost more than in-person ones.

• Airwallex helps you cut interchange costs through transparent interchange++ pricing and Optimize 360's network tokenization, which can qualify your transactions for lower interchange categories.

Interchange fees in Singapore are one of the biggest hidden costs of accepting card payments. You don't see them on your invoices, but they're deducted from every transaction before the money reaches your account.

In this guide, you'll learn how interchange fees work in Singapore, why some transactions cost more than others, and the most effective ways to bring your card-acceptance costs down.

What are interchange fees?

Interchange fees are the fees your business pays — through your payment processor — to your customer's bank every time you accept a debit or credit card payment.

Card networks like Visa, Mastercard, and American Express set the interchange rates. For each transaction, your payment processor pays the interchange fee to the customer's bank (the card issuer), then passes that cost on to you.

On your statements, you only see a single card processing fee. This is called the Merchant Discount Rate, or MDR. That total fee is made up of three parts, each going to a different party:

How much are interchange fees in Singapore?

In Singapore, there's no official cap on interchange fees, so the card networks set the rates themselves. This is different from the European Economic Area, where consumer debit is capped at 0.2% and consumer credit at 0.3%.¹ Australia currently caps consumer credit at 0.8%, dropping to 0.3% from October 2026.²

What you actually pay depends on:

• The type of card (debit vs credit, consumer vs corporate)

• Where the card was issued (domestic vs cross-border)

• How the payment was made (in-person vs online)

• Your industry, identified by your Merchant Category Code

Interchange usually makes up the largest part of your total MDR. The rest comes from the card network's assessment fees and your payment processor's markup.

To make this more concrete, here's a simple example.

Example: an S$150 card payment

Let's say a customer makes an S$150 purchase from your store using a credit card. Your total card processing fee (MDR) is 2%, or S$3.

That S$3 gets split between three parties:

• Card issuer (your customer's bank): around S$2.10 — this is the interchange fee

• Card network (Visa or Mastercard): around S$0.30

• Acquirer or payment processor: around S$0.60

After fees, the net amount deposited to your account is S$147.

Your customer doesn't see any of this. The fees come out of the transaction before the money reaches your business account.

How interchange fees work

Here's what happens when a customer pays by debit or credit card during a purchase:

Step 1: Transaction initiation

Your payment processor (the acquirer) receives the payment details from your checkout or terminal and sends them to the card network.

Step 2: The network checks with the issuer

The card network forwards the details to your customer's bank (the issuer) to confirm the funds are available.

Step 3: Approval or decline

The issuer approves or declines the payment and sends the response back through the network to your processor.

Step 4: Funds are settled

If approved, the issuer pays your acquirer — minus the interchange fee. Your acquirer then deposits the funds into your account, after taking its own processing markup and the card network's assessment fee.

Here's a visual representation:

How are interchange fees determined?

Interchange fees aren't fixed. They depend on a mix of factors tied to the transaction and your business. Here are eight factors to keep in mind:

1. Card-present versus card-not-present

Card-present (CP) transactions happen when your customer pays with their card in person. Card-not-present (CNP) transactions are when you accept payments online, without seeing the physical card.

Because online payments carry a higher risk of fraud, you'll usually pay lower interchange fees for in-person transactions than for CNP ones.

2. Credit versus debit cards

You'll typically pay higher fees for credit card transactions than debit card transactions. Credit card issuers take on more risk: if a customer defaults or exceeds their credit limit, the bank still has to cover the payment.

Debit card payments are lower risk, because the funds come directly from your customer's account.

3. Consumer versus corporate cards

Interchange fees are usually lower for consumer cards issued to individuals. Corporate cards or business cards tend to cost more.

Issuing banks take on higher risk with corporate cards. They also often provide perks like expense management features, which are partly funded through higher fees.

4. Card origin

If your customer's card was issued in a different country from your bank, this usually results in higher fees. Cross-border processing and currency conversion add cost.

5. Security

Card networks reward reduced risk. If your payment gateway uses fraud-prevention tools like tokenization, CVV checks, or address verification, this can translate into lower interchange fees. We cover this in more detail in the section on reducing your fees.

6. Card network

Visa, Mastercard, American Express, and other networks each set their own rates based on how they manage risk and reward programs.

7. Merchant category

Your business type, identified by a Merchant Category Code (MCC), affects your fees. Higher-risk industries (like airlines) pay more, while lower-risk sectors (like charities) often pay less.

8. Transaction location

Fees vary depending on where your business operates. Some regions cap interchange (like the European Economic Area and Australia, covered above). Others, including Singapore, leave it to the card networks to set the rates.

For Singapore merchants, this means there's no regulatory ceiling on what you can be charged for international card transactions. The trade-off: you have more freedom to choose providers with transparent pricing models that help you bring your costs down.

Interchange pricing models

Payment processors use different ways to charge interchange fees. Here are the four main types:

1. Interchange plus pricing (also known as interchange++)

This is the most transparent pricing model. You see a breakdown of the interchange fee, the card network's scheme fee, and your processor's markup for each transaction.

This model makes it easy to understand your costs and track them over time. It's the model used by most modern processors that prioritise pricing transparency.

2. Tiered pricing

With this model, transactions are grouped into "tiers" based on factors like card type and perceived risk. Each tier has its own fee, which can make your costs unpredictable.

It's simple for the processor to manage, but harder for you to forecast your expenses.

3. Flat-rate pricing (also known as blended pricing)

You pay a single fixed rate per transaction, no matter the card type or how the payment is made. It's easier to budget, because the fee averages out costs across all transactions.

You don't get the benefit of paying less for low-risk payments. But you also don't get penalised for high-risk ones either.

4. Subscription pricing

Under this model, you pay a monthly fee for a set of services. This usually includes lower or fixed transaction fees, access to multiple payment methods, reporting tools, and support.

This can work well if you process a consistent volume of transactions each month. It may not be ideal if your sales fluctuate.

Are interchange fees regulated in Singapore?

The Monetary Authority of Singapore (MAS) oversees payment service providers under the Payment Services Act 2019³, but MAS doesn't set or cap interchange rates. Those are decided entirely by the card networks like Visa and Mastercard.

This has two practical implications for your business:

You have no regulatory ceiling on what you can be charged

Unlike merchants in the European Economic Area or Australia, you can't rely on regulation to limit what international card schemes charge you. Your card-acceptance costs are shaped by your processor's pricing model and your transaction mix.

Domestic payment schemes can be a cheaper alternative

In a 2026 parliamentary reply, MAS noted that international card schemes are generally higher cost than domestic rails like NETS, PayNow, and SGQR⁴. Offering these alongside cards can lower your blended acceptance cost. We cover this in more detail below.

How to reduce your interchange fees in Singapore

You can't eliminate interchange fees, but you can shape what you pay. Here are six ways to bring your card-acceptance costs under control:

1. Choose the right payment processor

Different payment processors use different pricing models. Choose one with transparent pricing — like interchange++ — and a model that fits your business. This alone can save you a meaningful amount on your monthly card costs.

If your processor uses tiered or blended pricing, you may be paying more than you need to for lower-risk transactions. For a full breakdown of what different providers charge end-to-end, see our guide to payment gateway fees in Singapore.

2. Use network tokenization

Card networks like Visa and Mastercard issue what are called network tokens. These replace your customer's card number with a network-issued token used end-to-end across the payment ecosystem.

This is different from the basic tokenization most gateways already offer (sometimes called PCI or vault tokenization). That kind of token keeps card data inside one provider's system but doesn't qualify for issuer or network incentives.

Network tokens lower fraud risk and can qualify your card-not-present transactions for reduced interchange categories. For example, in the US, Visa applies a 5-basis-point (0.05%) Card Not Present Incentive for tokenized consumer credit transactions. This rises to 15 basis points (0.15%) when combined with the Digital Commerce Authentication Program.⁵

Network tokens also update automatically when cards are reissued. This means fewer failed payments on subscriptions and saved-card flows.

3. Use fraud-prevention tools

Card networks reward reduced risk. If your payment gateway supports CVV checks and address verification (AVS), this can translate into lower interchange categories — particularly for online transactions.

These tools sit alongside network tokenization rather than replacing it.

4. Offer alternative payment methods like PayNow

PayNow is a domestic Singapore payment scheme that moves money directly between bank accounts. Since it doesn't use the Visa or Mastercard rails, no interchange fee applies.

In its 2026 parliamentary reply, MAS confirmed that domestic schemes like PayNow, NETS, and SGQR are significantly lower in costs than international card schemes⁴. Offering these alongside cards gives your customers a familiar local option and lowers your blended acceptance cost.

5. Optimise how transactions are routed and processed

How your processor handles each transaction has a direct impact on the interchange category it qualifies for. Modern processors can:

• Route transactions through local acquiring rails to qualify for domestic interchange rates, which are usually lower than cross-border rates.

• Use account updater services to automatically refresh expired or replaced card details, reducing failed payments on saved cards.

• Pass enriched data (sometimes called Level 2 or Level 3 data) on B2B transactions to qualify for lower commercial card rates.

6. Add credit card surcharges where it makes sense

In Singapore, surcharging credit card transactions isn't prohibited. You can use it to offset interchange and processing fees.

There are two caveats. First, surcharges can hurt customer satisfaction and may reduce conversions if customers feel they're being penalised for using cards. Second, surcharging is restricted or banned in some markets outside Singapore, such as parts of the European Economic Area.

With this in mind, weigh the cost saving against the customer-experience impact before turning going this route. 

How Airwallex helps you reduce interchange fees in Singapore

Interchange fees are unavoidable, but the right payment partner can help you pay less of them. Airwallex combines transparent pricing with active optimisation, so you're not guessing what each transaction really costs.

Here’s what you get with Airwallex: 

Transparent interchange++ pricing

You see the actual interchange fee, the card network's scheme fee, and Airwallex's markup for every transaction. No tier blending. No hidden uplift.

This makes it easy to track your true cost of acceptance and identify where you can save.

Network tokenization through Optimize 360

Airwallex's Optimize 360 uses Visa and Mastercard network tokens by default. This can qualify your card-not-present transactions for lower interchange categories — the same incentive structure we covered in the previous section.

Network tokens also lift authorisation rates and reduce failed payments when cards are reissued. That protects revenue on recurring billing and saved-card flows.

Local payment rails and multi-currency settlement

For Singapore businesses selling across borders, Airwallex routes payments through local rails in 120+ countries. This means fewer cross-border interchange uplifts and lower FX costs.

You can also accept payments in 130+ currencies and settle in 14+ currencies in your multi-currency wallet, so you're not converting unnecessarily and incurring FX fees.

Local payment methods built in

Airwallex supports PayNow and other local payment methods. This gives your Singapore customers a familiar checkout option that bypasses card-network interchange entirely.

Frequently asked questions (FAQs)

Does PayNow have an interchange fee in Singapore?

No. PayNow moves money directly between bank accounts and doesn't use the Visa or Mastercard card rails, so no interchange fee applies. In its 2026 parliamentary reply, MAS confirmed that domestic schemes like PayNow, NETS, and SGQR are significantly lower in cost than international card schemes⁴.

Are interchange fees regulated by MAS?

MAS oversees payment service providers in Singapore under the Payment Services Act 2019³, but it doesn't set or cap interchange fees. Those rates are decided by the card networks like Visa and Mastercard. This is different from the European Economic Area and Australia, both of which cap interchange rates by regulation.

What's the average interchange fee in Singapore?

There's no single published average. Card networks don't release SG-specific aggregate data. The fee on any given transaction depends on the card type, where the card was issued, how the payment was made, and your business category. Your effective rate is best understood by reviewing the breakdown on your processor's statements.

Are interchange fees negotiable?

Interchange fees themselves aren't negotiable — they're set by the card networks. But the markup your payment processor adds on top can be negotiated, especially if you process a high volume of transactions. Choosing a processor like Airwallex with transparent interchange++ pricing also helps you see exactly where your money is going.

Can customers see or avoid interchange fees?

No, customers can't see or avoid interchange fees. These fees are charged to the merchant and deducted automatically from each transaction before the funds reach your account. While you can choose to pass on part of the cost through a surcharge in Singapore, the fee itself stays invisible to the customer.

What's the difference between interchange fees and payment processing fees?

Interchange fees make up part of your total payment processing fees, which are bundled into your Merchant Discount Rate (MDR). The MDR also includes the card network's assessment fee and your payment processor's markup. Of the three, interchange is usually the largest component.

Sources:

1.  https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A32015R0751

2. https://www.rba.gov.au/payments-and-infrastructure/review-of-retail-payments-regulation/2026-03/conclusions-paper/interchange-fees.html

3.  https://www.mas.gov.sg/regulation/payments

4. https://www.mas.gov.sg/news/parliamentary-replies/2026/written-reply-to-parliamentary-question-on-visa-and-mastercard-fees

5. https://usa.visa.com/dam/VCOM/download/merchants/visa-usa-interchange-reimbursement-fees.pdf

This publication does not constitute legal, tax, or professional advice from Airwallex, nor does it substitute seeking such advice, and makes no express or implied representations / warranties / guarantees regarding content accuracy, completeness, or currency. If you would like to request an update, feel free to contact us at [[email protected]]. Airwallex (Singapore) Pte. Ltd. (201626561Z) is licensed as a Major Payment Institution and regulated by the Monetary Authority of Singapore.