Who pays scheme fees?

The acquirer pays them to the scheme and passes them to the merchant, either as a separate line under interchange++ pricing or inside a blended rate. A PayFac or platform passes them to its sub-merchants the same way. The cardholder never pays scheme fees directly.

The three cost layers

A card payment carries three cost layers. Interchange is set by the scheme but paid to the issuer; in the EU it is capped at 0.2% for consumer debit and 0.3% for consumer credit. Scheme fees are set by the scheme and paid to the scheme, by the acquirer. The acquirer margin is what the acquirer or PSP keeps.

How scheme fees reach the merchant

Acquirers pass scheme fees through to merchants, and platforms pass them through to their sub-merchants. An operator buys scheme fees at cost from its acquirer and sells them to merchants either at cost (IC++) or inside a blended rate. With blended pricing, every scheme fee increase eats the operator’s margin until the next repricing. Acquirers receive the schemes’ invoices monthly or quarterly, often with a two-month delay for behavioral fees, and re-bill them, sometimes with a markup.

More detail in our #PayDecoding episode on Scheme fees.