What is the difference between scheme fees and interchange?

Interchange is set by the card scheme but paid to the cardholder’s bank, and it is capped in the EU and the UK. Scheme fees are charged by Visa or Mastercard to the acquirer for using the network: assessments, authorization, cross-border, settlement currency and integrity fees. Neither goes to the acquirer.

What are scheme fees and how are they different from interchange?

Scheme fees are not one fee. A US acquirer’s price list shows the main families: an assessment of 0.14% of volume on Visa credit and 0.1275% to 0.1475% on Mastercard, per-transaction authorization and clearing fees, an international service assessment of 0.80% plus 0.45% on non-US cards, a fixed monthly network access fee, and integrity fees for misuse of authorization, late settlement or pre-authorizations left open. Europe has its own versions, with cross-border, non-domestic settlement currency, 3-D Secure, account verification and tokenization fees.

How do scheme fees show on an interchange++ invoice?

On an IC++ statement, each transaction carries its interchange line, its scheme fee line and the acquirer’s markup. The scheme fee line is itself a sum: assessment, authorization fee, cross-border, settlement currency, and any integrity fee triggered by that transaction.

More detail in our #PayDecoding episode on Scheme fees.