Understanding Scheme Fees: The Hidden Costs of Card Payments
By Rihab Oudda (August 22, 2025)
Welcome to our blog series, where we demystify the complex world of payment fees for merchants and platforms. Our goal is to empower you with clear insights into what these fees are and how to manage them effectively. In our previous post, we explored interchange fees in depth. Now, we’re turning our attention to another critical cost in payment processing: scheme fees. These often-overlooked charges can quietly erode profit margins, making it essential to understand and optimize them.
What Are Scheme Fees?
Scheme fees are charges levied by card networks (e.g., Visa, Mastercard, American Express) on acquirers (financial institutions that process card payments for merchants). These fees are typically passed on to merchants as part of the Merchant Service Charge (MSC), in some cases without a clear breakdown as payment service providers might not have detailed reporting capabilities, making them hard to track.
These fees support the infrastructure of global card networks, enabling:
- Transaction processing and authorization
- Fraud prevention and compliance tools
- Innovation and marketing initiatives
- Cross-border transaction capabilities
- Card scheme programs to improve processing standards
For example, when a customer uses a Visa debit card at your store, the scheme fee covers Visa’s role in facilitating that transaction between the cardholder’s bank (issuer) and your bank (acquirer).
Why Scheme Fees Exist?
Scheme fees come in various forms, depending on the card network and transaction details. The most common types include:
- Assessment Fees: A percentage of the transaction volume, contributing to network development, innovation, and marketing.
- Processing/Authorization Fees: Charged per transaction for verifying and authorizing payments.
- Cross-Border Fees: Applied when the merchant and card issuer are in different countries, often higher for interregional transactions.
- Network Access or Brand Usage Fees: Fees for using the card network’s branding and infrastructure.
- Account Maintenance or Compliance Fees: Costs related to anti-money laundering (AML) services or other regulatory requirements.
Note: Merchants often don’t see these fees itemized, as many acquirers bundle them into a single charge, adding to the opacity.
What Influences Scheme Fees?
Several factors determine the cost of scheme fees, making them complex and variable:
- Card Brand: Each network (Visa, Mastercard, Amex, etc.) sets its own fee structure, which is periodically reviewed and adjusted.
- Card Type: Fees differ for debit, credit, consumer, business, corporate, or purchasing cards.
- Transaction Method: Online or phone-based (card-not-present) transactions typically incur higher fees than in-store (card-present) transactions, such as contactless or PIN-based payments.
- Merchant Category Code (MCC): The type of business you operate can affect fee rates.
- Domestic vs. Cross-Border: Transactions within the same country are generally cheaper than those involving different regions. For instance, post-Brexit, UK merchants face higher fees for EEA transactions.
- Currency Used: Multi-currency settlements can trigger additional clearing fees.
Tracking these fees is challenging because card networks update their pricing regularly, often without public disclosure.
Transactional vs Non-Transactional
Scheme fees can be broadly categorized into two types: transactional and non-transactional. Understanding the difference is key to managing payment costs effectively.
- Transactional Scheme Fees: These are charged on a per-transaction basis and are typically deducted directly from the settlement of each payment. They are tied to specific transaction details, such as card type, transaction method, or cross-border status. Examples include authorization fees or cross-border fees, which are applied immediately and reflected in real-time transaction reporting.
- Non-Transactional Scheme Fees: Unlike transactional fees, non-transactional fees are not tied to individual transactions and are not net-settled (i.e., subtracted from the transaction settlement). Instead, they are calculated based on aggregated transaction data, such as monthly or quarterly volumes, and appear on monthly invoices with a billing delay (typically one to two months). These fees are often more complex due to:
- Volume-Based Calculations: Fees like the Visa Fixed Acquirer Network Fee (FANF) or Mastercard Merchant Location Fee (MLF) are based on total merchant sales volume or the number of merchant locations.
- Transaction History: Fees like the Visa System Integrity Fee or Mastercard TPE Excessive Authorizations Fee depend on historical transaction patterns, such as excessive retries or decline codes.
- Scheme Reporting: Fees like the Visa 3D Secure Fee or Mastercard Not Tokenized Credential-on-File Fee rely on reports provided by card schemes, which delay billing.
Examples of Non-Transactional Scheme Fees:
- Visa Fixed Acquirer Network Fee (FANF): A monthly fee in the US based on the number of merchant locations, Merchant Category Code (MCC), and total sales volume. For instance, a high-volume merchant with multiple locations might be charged based on a tiered structure, with fees ranging from $2 to over $100 per Taxpayer ID Number, appearing on the invoice a month later.
- Mastercard Merchant Location Fee (MLF): A monthly fee of $1.25 per active merchant location in the US, charged based on the number of locations, with exemptions for Charitable or Religious organizations, and merchants with sales under $200 monthly.
- Visa System Integrity Fee: Comprises the Excessive Retry Fee and Data Quality Fee, calculated based on transaction history and reported with a one-month delay.
- Mastercard TPE Excessive Authorizations Fee: Charged for excessive authorization attempts on a single card, with a two-month billing delay due to Mastercard’s reporting schedule.
- Visa and Mastercard 3D Secure Fees: Charged for 3D Secure authentication requests in the EU and GB, based on monthly scheme reports.
Why It Matters: Non-transactional fees can be harder to track because they’re not tied to individual transactions and often appear with a delay. Merchants need tools to monitor these fees and understand their impact on overall costs
Visa & Mastercard Scheme Fees
Scheme Fees are complex to track and understand. Below is a list of some common scheme fees:
| Fee Type | Description |
|---|---|
| Acquirer Assessment Fee | A standard fee assessed on all Mastercard or Visa transactions, charged to cover network usage costs. |
| Cross Border Assessment Fee | A fee charged by Visa or Mastercard on cross-border transactions when the cardholder’s country differs from the settlement currency country. This fee is passed to merchants as part of the overall cost of accepting international payments. |
| Preauthorization Fee | A fee applied to all Mastercard preauthorized transactions. |
| Acquirer Clearing Fee | A fee charged by Mastercard to cover the costs of processing and clearing transactions across its network. |
| Verification Service (AVS) | A non-compliance fine imposed by Visa on transactions where manipulated data is used in authorization reattempts. |
| Card Verification Value Service (CVV2) | A Visa fee applied to transactions where CVV2 is used to validate card authenticity. It reduces fraud, increases approval rates, and ensures invalid credentials are not stored in merchant systems. |
| MC Auth Optimizer AI Fee | A Mastercard fee for card-not-present transactions declined due to insufficient funds. Priced at $0.02 (USD) per attempt (effective October 9, 2023), it supports AI-powered tools that optimize reattempts, improving approval rates and reducing customer friction. |
| VI Intl Refund Trx APF Debit | A Visa fee for international refund transactions on debit cards, which may include an Acquirer Processing Fee (APF). Funds are credited back to the cardholder, though processing times vary by issuer. |
| VI SPS Repeat Auth Decline | A Visa fee related to declined authorization requests with response codes R0, R1, or R3. The decline is reported to the issuer with advice messages. |
| MC innovation Fund-Germany-Dom | A Mastercard fee specific to Germany that supports innovation initiatives within the domestic card payments industry. |
| MC Token Fee – CNP Inter | A Mastercard fee for token validation and lifecycle services in card-not-present (CNP) international transactions. |
| Visa Account Verification | An optional Visa transaction type used to verify account status before submitting an authorization. |
| Visa Unmatched Clearing Fee | A non-compliance fee applied when a clearing transaction cannot be matched to a previously approved or partially approved authorization. |
| Visa Misuse of Auth Fee | A fee imposed when merchants fail to settle or reverse an authorization within the required timeframe. Effective January 1, 2025, in the U.S., this fee is $0.15 per non-compliant transaction. |
| Visa System Integrity Fee-Never Approve | A fee assessed when merchants retry transactions that received a “Never Approve” decline (invalid, blocked, or closed cards). These declines should not be reattempted, and customers should be asked to provide another payment method. |
| MC Integrity Fee Final Auth | A Mastercard fee applied when a final authorization is not cleared or reversed on time, or when the settlement amount does not match the authorized amount. |
| MasterCard Merchant Advice Code Fee | A fee within Mastercard’s Authorization Optimizer Program, charged when merchants retry insufficient funds transactions despite a Merchant Advice Code (MAC) in the response. Fees vary by region (e.g., $0.02 in the U.S., €0.004 in the EU). |
| Global Wholesale Travel Transaction | A Mastercard fee applied to wholesale travel industry transactions, typically volume-based and charged by acquirers to merchants. Rates can be significant, sometimes reaching 1.57% to 3.75%. |
| Visa System Integrity Fee -Excessive Auth | A Visa fee imposed on merchants that repeatedly submit authorization attempts after receiving declines from issuers. |
Here, you can find are some examples of scheme fees from a European payment service provider.
Are Scheme Fees Regulated?
Unlike interchange fees, which are subject to regulatory caps in many regions, scheme fees are unregulated in most markets. This lack of oversight makes them less transparent and harder to benchmark. Card schemes like Visa and Mastercard set their fees independently, and the true costs are often known only to the schemes themselves. This opacity can leave merchants vulnerable to unexpected cost increases, but regional regulators are deeply engaging to bring more clarity, see for example the efforts from the European commission this year.
Can You Lower Scheme Fees?
While scheme fees are non-negotiable, merchants can take steps to minimize their impact:
- Use Local Acquiring: Partnering with local acquirers for international transactions can reduce cross-border fees.
- Optimize Routing Strategies: Work with payment service providers (PSPs) to route transactions through lower-cost networks where possible.
- Monitor Fee Patterns: Regularly review invoices and statements to identify anomalies or fee spikes.
- Choose Transparent PSPs: Select providers that offer detailed reporting to break down scheme fees clearly.
Tools like Congrify can help merchants analyze and optimize these costs, uncovering savings opportunities.
How Congrify Helps
Congrify offers a powerful no-code solution to help merchants gain visibility and control over scheme fees, transforming complex payment data into actionable insights. Here’s how Congrify can make a difference:
- Comprehensive Data Integration: Congrify connects to over 20 payment service providers (PSPs) like Stripe, Adyen, PayPal, and more, pulling data via webhooks, PSP APIs, CSV uploads, or its own API. This unified view eliminates the need to log into multiple provider portals, ensuring all transaction and fee data is accessible in one place.
- Detailed Fee Breakdowns: Congrify’s dashboards break down scheme fees by card network, transaction type, and provider, providing clarity on costs like assessment fees, authorization fees, and cross-border charges.
- Fee Allocation: Congrify’s fee allocation engine looks at bulk costs (for example from invoices) to create a distribution to single transactions based on different parameters such as transaction types, payment methods, schemes, processing flags.
- Near Real-Time Payment Insights: Congrify analyzes key performance indicators (KPIs) such as authorization rates, decline reasons, fraud, chargebacks, and transaction fees, helping merchants identify patterns and optimize payment strategies.
- Automated Alerts and Recommendations: The Congrify engine uses AI to detect anomalies, such as fee spikes or unusual transaction patterns, and sends custom alerts to keep merchants informed. It also provides actionable recommendations to improve payment performance and reduce costs.
- Seamless Data Standardization: By standardizing data from multiple PSPs, Congrify simplifies reconciliation and ensures consistency, making it easier to compare costs across providers and identify savings opportunities.
By leveraging Congrify’s advanced analytics and AI-driven insights, merchants can uncover hidden costs, optimize provider selection, and make data-driven decisions to minimize the impact of scheme fees.
Ready to have better visibility and control over your scheme fees? Book a call with our payments expert to know more.