eli5 How do credit card companies make money out of people that pay their cards in full before the billing cycle and still get rewards?

Question

eli5 How do credit card companies make money out of people that pay their cards in full before the billing cycle and still get rewards?

In: 808

Answer 1

It’s called “Interchange”. Interchange is what is charged by the issuing bank to the merchant when they process a card. Interchange typically makes up the majority of the fees merchants pay their credit card processor. This is why you’re starting to see a lot of businesses surcharge card users.