Scheme fee
Also known as: Scheme fees, Card scheme fee
A scheme fee is what an acquirer or issuer pays the operator of a card scheme for scheme and processing services. It is separate from interchange, falls outside the EU interchange caps, and sits inside the merchant service charge.
Last reviewed
Example
Illustrative only. A merchant on a pass-through contract might see a separate line for the scheme's charge on every transaction. On a blended contract the same charge is folded into one headline rate.
If interchange is the fee everyone talks about, the scheme fee is the one nobody explains.
The UK Payment Systems Regulator's glossary defines scheme fees as "fees paid by acquirers (and issuers) to the operator of a card payment system including fees for scheme services and fees for processing services". The card scheme charges them for running the rules and the network. The acquirer pays its share and recovers it from the merchant.
Unlike interchange, the scheme fee is not capped. The European Commission's 2020 review of the Interchange Fee Regulation says plainly that scheme fees "are not within the scope of the IFR". It found they "appear to have increased to a limited extent", especially those of international schemes, while domestic scheme fees "remained low and stable". It also noted the evidence did not show a causal link between lower interchange and higher scheme fees.
What the Regulation does require is visibility. Article 9 obliges acquirers to give merchants individually specified information on the merchant service charges, interchange fees and scheme fees for each card category and brand, unless the merchant asks otherwise in writing. Article 7 makes schemes and processing entities independent in accounting, organisation and decision-making, and forbids bundled pricing of scheme and processing activities.
It shows up as its own line on an unblended statement, or invisibly inside a blended rate. In the merchant service charge the Commission describes, it is one of three parts, with interchange and the acquirer's margin.
Merchants forget that this line can move without any law changing. A merchant on a pass-through contract such as IC++ feels it directly. A merchant on a blended rate feels it only when the acquirer reprices.
Ask for the scheme fee by name. It is part of the bill whether or not it has its own line.
