What is Scheme fee?
Fees charged by Visa and Mastercard (or another scheme) to acquirers and issuers on every transaction.
Scheme fees, also known as card association fees, are a diverse set of charges levied by card schemes like Visa, Mastercard, and American Express on their members: the acquirers and issuers.
These fees are the primary source of revenue for the schemes themselves, funding their global network operations, security infrastructure, brand marketing, and technological innovation.
Unlike interchange fees, which are passed from the acquirer to the issuer, scheme fees are paid by both parties to the central scheme.
For merchants, these costs are typically passed through by their acquirer, appearing as separate line items in an interchange-plus-plus (IC++) pricing model or bundled into the single rate of a Blended pricing model.
These fees are not a single charge but a complex collection of dozens of different potential fees, calculated on a per-transaction, ad valorem (percentage-based), or event-driven basis.
Common examples include assessment fees (a percentage of transaction volume), authorisation fees (a fixed cost per authorisation attempt), and cross-border fees.
Schemes also levy 'integrity' fees to discourage non-compliant behaviour, such as the Transaction Integrity Fee (TIF) from Mastercard for transactions that do not meet data standards, or fees for excessive authorisation declines.
A common point of confusion is thinking scheme fees are a minor cost; while individually small, their cumulative total can be significant, often adding 10-20 basis points to the total cost of a transaction.
Worked example
A UK merchant processes a £100 online transaction using a Mastercard. On an interchange-plus-plus (IC++) plan, the merchant's statement would show the scheme fees broken out.
For this £100 transaction, the fees might include: 1) a Mastercard Assessment Fee of 0.0275% (£0.0275); 2) a Clearing Fee of €0.0029 (converted to sterling, approx. £0.0025); and 3) an Acquirer Authorisation Fee of £0.0053.
Additionally, if the cardholder was in the US, a Cross-Border Assessment Fee of 0.60% (£0.60) could apply.
In this cross-border scenario, the total scheme fees would be £0.0275 + £0.0025 + £0.0053 + £0.60 = £0.6353, or around 64 basis points on top of interchange and the acquirer's margin.
This demonstrates how scheme fees, especially for international sales, can be a material cost.
Scheme notes
Visa and Mastercard have distinct and continuously evolving fee structures. For instance, Visa charges a 'Digital Service Fee' for card-not-present transactions in some regions, while Mastercard levies a 'Digital Enablement Fee'.
Both schemes charge integrity fees to enforce best practices; Visa's Fixed Acquirer Network Fee (FANF) in the US is a complex tiered fee based on merchant size and card acceptance methods, whereas Mastercard charges specific per-item fees for activities like Clearing and settlement.
In Europe, Visa's scheme fees for intra-regional transactions are typically around 0.01% to 0.05% plus small fixed amounts, whereas Mastercard's are in a similar range. American Express bundles its network fees into a single 'discount rate' for merchants it acquires directly.
Why it matters for merchants
While individually smaller than interchange, scheme fees represent a material and often complex part of a merchant's total cost of acceptance.
Without a transparent pricing model like interchange-plus-plus, these costs are opaque and bundled into a single rate, making it impossible to analyse or control them. Understanding the drivers of scheme fees allows merchants to minimise unnecessary costs.
For example, ensuring high data quality in authorisation requests can avoid integrity fees, and working with a payment provider that offers Local acquiring can eliminate hefty cross-border scheme fees.
Cardflo's IC++ pricing provides full transparency, while its smart routing can direct transactions to local acquirers, directly mitigating these specific cross-border scheme surcharges.
Frequently asked
How do scheme fees differ from interchange fees?
Interchange fees are paid by the acquirer to the cardholder's issuing bank to cover the costs of credit risk and card issuance.
In contrast, scheme fees are paid directly to the network provider, such as Visa or Mastercard, for the use of their proprietary payment rails and brand services.
Why might scheme fees fluctuate for the same transaction volume?
Scheme fees are influenced by several variables including the geographic location of the issuer, the card type used, and specific technical compliance.
Networks frequently update their fee schedules in April and October, potentially introducing new costs for specific transaction characteristics like lack of SCA or cross-border processing.
Are scheme fees regulated like interchange fees in Europe?
No, scheme fees are not subject to the same hard regulatory caps as interchange fees under the EU's Interchange Fee Regulation (IFR).
While regulators monitor them to ensure they are not used to circumvent the interchange caps, the schemes have more flexibility in how they are structured and priced.
This has led to an increase in the number and complexity of scheme fees in recent years, a trend sometimes referred to as 'fee creep'.
Can I negotiate scheme fees?
Merchants cannot negotiate scheme fees directly with Visa or Mastercard. These rates are set by the schemes and applied to acquirers, who then pass them on.
However, merchants can take actions to minimise the scheme fees they incur, such as reducing cross-border volume through Local acquiring or ensuring high data quality to avoid penalty fees.
Choosing a transparent pricing model like IC++ also allows you to audit these fees and ensure they are being passed through correctly.
What is an 'integrity fee'?
An integrity fee is a type of Scheme fee levied by card networks to penalise behaviour that does not comply with their technical or data standards.
For example, Mastercard's Transaction Integrity Fee (TIF) may be applied if a card-not-present transaction is submitted without the correct e-commerce indicator. Visa may charge a similar fee for failing to use AVS or CVV correctly.
These fees are designed to incentivise merchants and acquirers to provide clean, complete transaction data, which improves the performance and security of the entire network.
Why do I see scheme fees charged in different currencies?
Scheme fees are often set by the schemes in their primary operating currency, which is typically US dollars or euros. Your acquirer will pay these fees on your behalf and then convert them to your local settlement currency for billing.
For example, a Mastercard Clearing fee might be fixed at €0.007 per transaction. Your processor will show this on your statement converted into GBP or your local currency at the prevailing exchange rate, which is why the exact amount can fluctuate slightly month to month.
Is the Scheme fee higher for card-not-present transactions?
Yes, card-not-present (CNP) transactions, such as e-commerce sales, often incur higher and more numerous scheme fees than their card-present counterparts. This is because CNP transactions are considered higher risk.
Schemes may apply specific digital enablement or service fees to these transactions. For example, in some regions, Visa applies a 0.05% Acquirer Program Support Fee for CNP transactions, which does not apply to in-person sales.
See how Scheme fee plays out in practice
Industries and regions where this term drives real acquiring, routing, or dispute decisions.
Related terms
The fee paid by the acquirer to the issuer on every card transaction, set by the schemes.
Transparent acquirer pricing model that passes interchange and scheme fees through at cost with a fixed processor markup on top.
A single flat rate (e.g. 2.9% + 30¢) charged on all card transactions regardless of underlying interchange.
A card transaction where the issuer country differs from the acquirer country, attracting higher interchange and scheme fees.
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