Card scheme fees: the part of the price nobody capped

Every deduction from a card payment on an open network splits into three. Interchange goes from the acquirer to the bank that issued the card, and the network sets it. The scheme fee goes to the network itself for the authorization switch, the brand and the rules. The acquirer's margin is what the institution holding your acceptance contract keeps.

Only the first of the three is regulated in the European Union. Only the third is negotiable. The middle one is set by the network and passed through, and Ixopay states plainly that scheme fees are non-negotiable and unregulated in most markets, which makes them harder to benchmark than interchange. Finance Loop covers the acquirer's side in merchant acquiring.

The EU caps interchange on consumer cards at 0.2 percent of the transaction for debit and 0.3 percent for credit, in force since December 2015. Adyen's summary of the cap gives the rates it replaced: 1.58 percent in Germany for Visa consumer cards, 1.00 percent in Austria, 0.87 percent in the United Kingdom. Member states may set lower debit caps or a maximum amount per transaction.

Three gaps matter for a merchant's invoice. The cap applies to a European card at a European merchant, so a card issued outside the EEA carries an uncapped interregional rate. Commercial cards issued for business expenses are outside it. And three-party schemes such as American Express and Diners are outside it where the same scheme both issues the card and acquires the merchant. Finance Loop covers the German picture in card payments in Germany.

They went up, and the retail side has numbers for it. EuroCommerce reports a cumulative 33.9 percent increase in the fees of the international card schemes between 2018 and 2022, 7.6 percent a year on average and on top of inflation, with one study putting the rise between January 2018 and May 2020 at 47 percent on average and 150 percent at one scheme. It puts the additional amount charged between 2016 and 2021 at 1.46 billion euros and asks the Commission to extend price control to scheme fees in a review of the regulation.

The schemes answer that the services behind the fees grew, and the merchant's problem sits underneath that argument: a price that is set unilaterally and revised through the year cannot be budgeted the way interchange can. The European Commission has since sent questionnaires to retailers and payment service providers about whether scheme fees harmed merchants in the EEA between 2016 and 2023, and whether merchants had any say in the changes.

The list runs longer than most merchants expect, and the names differ between the two schemes. An assessment fee is a percentage of volume. An authorization fee is a fixed amount per request, charged whether or not the transaction is approved. A cross-border fee applies when the merchant and the issuer sit in different countries, at a higher rate again when they sit in different regions. Currency conversion carries its own fee. There are network access and brand usage charges, and account or compliance fees covering the scheme's own regulatory work.

Two details cost money quietly. An authorization that is declined still carries its authorization fee, so a high decline rate pays the network twice over. And a refund does not return the fees on the original transaction: the assessment and authorization charges paid when it ran stay with the network, which makes a returns-heavy business pay scheme fees on revenue it never kept.

The pricing model decides whether any of this is visible. Under interchange-plus, often written interchange++, the acquirer passes interchange and scheme fees through at cost and states its margin separately, so each layer appears as its own line. Under a blended rate, one number covers all three for every transaction.

Adyen's point about the blended model is the one to keep: a blended rate has no contractual link to interchange, so it does not automatically fall when interchange falls. For a merchant comparing offers, interchange-plus is the only model where two quotes can be compared at all, because the pass-through layers are identical between providers and the margin is the only number in dispute.

Four attributes drive the same purchase to a different price. Where the card was issued sets whether the capped domestic rate, an EEA cross-border rate or an interregional rate applies. Whether the cardholder was authenticated matters: a card-not-present transaction sent without strong customer authentication carries a higher interchange rate and an e-commerce surcharge, and it shifts the fraud liability to the merchant.

The card product matters, since commercial and premium consumer cards sit outside the caps. And the merchant category code, the four digits classifying what the business sells, feeds into both interchange tables and scheme fee rates. A code that no longer matches the business is worth checking, because it is set once at onboarding and rarely revisited. Finance Loop covers the authentication rules in strong customer authentication and the checkout question in e-commerce payments in Germany.

Not the scheme's price list, and that is the starting point. What a merchant controls is the mix: the share of transactions that are authenticated, the share of declines that generate a paid authorization and a retry, the share of volume on domestic cards, and the acquirer's margin.

Two structural moves cut the base. An acquirer licensed in the region where the volume sits removes cross-border fees on that volume. And moving part of the volume off cards onto a direct account transfer removes interchange and scheme fees together, which is the commercial reason behind the European interest in account-to-account payment. Finance Loop covers that route in account-to-account payments.

Who receives the money. Interchange goes to the bank that issued the card and compensates it for funding and risk; the EU caps it at 0.2 percent for consumer debit and 0.3 percent for consumer credit. The scheme fee goes to Visa or Mastercard for operating the network, and no EU cap applies to it. Both are set by the scheme, and both are passed through by the acquirer.

No. The scheme sets them and revises them on its own schedule, and an acquirer passes them on without discretion over the rate. What is negotiable is the acquirer's margin and the pricing model. A merchant asking for a lower rate is asking about the third layer, and a merchant who wants to see which layer moved has to ask for interchange-plus pricing in the contract.