New Delhi, Aug. 19 -- If you are a credit card user, you would have come across a number of terms that explain the various charges, financial parameters, and key metrics associated with it. But do you know what an interchange fee is? Interchange fee is probably the most important element in the world of credit cards and keeps the cycle of financing the purchases running uninterrupted.

Every time you use a credit card to make a purchase, the merchant's bank account is levied an interchange fee. The merchant's bank (acquiring bank) recovers it from the merchant in due course after giving she/he certain discounts. "Interchange is a small fee paid by a merchant's bank (acquirer) to a cardholder's bank (issuer) to compensate the issuer for th...