Why scheme fees matter
Interchange is what the merchant's bank pays the cardholder's bank. Scheme fees are what both banks pay the network for the privilege of operating on the network at all. They are separate line items, and a fintech that models only interchange will miss roughly 10–20 basis points of cost on every transaction.
The big categories: assessments (a flat percentage of dollar volume), per-transaction fees, cross-border fees (when card and merchant are in different countries), and various behavioral fees (chargeback fees, integrity-program fees, network access fees).
When scheme fees get expensive
They get expensive in: (a) cross-border programs, where currency-conversion and international assessment fees stack quickly; (b) programs with elevated chargeback rates, where the network imposes integrity-monitoring fees; (c) high-risk MCCs where networks layer in compliance-program fees; and (d) any program large enough to require its own network sponsorship arrangement.
Common pitfalls
- Confusing scheme fees with interchange. They are different and quoted separately. Net your true cost.
- Not auditing the processor statement. Processors aggregate scheme fees in opaque ways. Ask for a network-reported breakdown if you can get one.
- Ignoring annual network rule updates. Visa and Mastercard publish rule updates twice a year that can re-price your scheme fees.
Scheme fees are the network's pricing power. They are quieter than interchange, but they accumulate.