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Accurate interpolation and approximation techniques for functions with discontinuities are key tools in many applications, such as medical imaging. In this paper, we study a radial basis function type of method for scattered data interpolation that incorporates discontinuities via a variable scaling function. For the construction of the discontinuous basis of kernel functions, information on the edges of the interpolated function is necessary. We characterize the native space spanned by these kernel functions and study error bounds in terms of the fill distance of the node set. To extract the location of the discontinuities, we use a segmentation method based on a classification algorithm from machine learning. The results of the conducted numerical experiments are in line with the theoretically derived convergence rates in case that the discontinuities are a priori known. Further, an application to interpolation in magnetic particle imaging shows that the presented method is very promising in order to obtain edge-preserving image reconstructions in which ringing artifacts are reduced.