Interchange Dynamics Reveal Diverse Risk Pools

Interchange payments are not a uniform entity; they vary significantly across different categories such as consumer credit, business debit, and charge cards. This variance implies that any discussions around cutting interchange should consider these distinctions instead of treating all interchange as the same. Specifically, German exempt interchange stands out as a potential target for cuts due to its allowance for significantly higher revenue rates compared to capped regulated rates. The exemption supports small banks, highlighting the importance of local banking for community financial health. Thus, understanding the complexity of interchange sources is crucial for FinTech narratives and strategic assessments.