The short answer
Interchange optimization is the practice of getting your transactions into the cheapest interchange category they legitimately qualify for. It's done by sending extra fields with the auth, capturing funds inside a specific time window, and sometimes routing debit transactions through alternate networks.
In plain English
Visa and Mastercard publish hundreds of interchange tiers. The same $100 charge can cost anywhere from $0.45 to $2.40 in interchange depending on which tier it lands in. Tiers are assigned automatically based on what data your processor sends. If you don't send AVS results, CVV, tax amount, customer code, or settle late, the transaction "downgrades" to a more expensive tier.
Optimization doesn't change network rates. It just stops you from accidentally paying the expensive version of those rates.
What operators need to know
- Level 2 and Level 3 data — passing tax, customer code, line items, freight, and duty drops B2B interchange by 30–80 bps. Most relevant if your merchant mix includes B2B or government card volume.
- Settle within 24 hours — auth captured after T+1 downgrades to a non-qualified tier on most networks. Stripe auto-captures by default; custom flows can miss this.
- Send full AVS + CVV — missing CVV on a CNP sale bumps it to the top interchange tier ("EIRF" or similar). Always capture it.
- Debit routing — post-Durbin, regulated debit can route through non-Visa networks (Pulse, Star, NYCE). Processors like Stripe and Square do this silently; if you self-route, you can shave ~$0.10 per debit transaction.
- MCC accuracy — a charity or utility MCC gets preferential interchange. Running a real charity on MCC 5969 (direct marketing) burns money.
Numbers to know
Downgrade tiers cost 0.4–1.0% more than the optimized tier. On $1M in card volume, aggressive optimization saves $4K–$10K/year. Level 3 B2B optimization on a $500K B2B volume book saves ~$2.5K/year. On consumer e-commerce, the biggest wins are from CVV/AVS capture and prompt settlement, which most modern gateways already do.
Why multi-brand operators care
Optimization compounds across brands. If five brands each downgrade 15% of volume because of a flaky checkout, you're paying six figures more in interchange than you should. A single parent-level audit of how each brand's gateway passes auth data surfaces the bleeders fast.