Credit Card Fee Structure

Every time a card payment is processed, 𝘁𝗵𝗿𝗲𝗲 main types of fees are involved. Here’s a simple breakdown of the Three Core Fees: 1️⃣ Interchange Fee This is paid by your acquiring bank (or payment processor) to the cardholder’s bank (the issuer). It’s set by the card networks (like Visa and Mastercard; sometimes regulated), and is designed to cover things like fraud, credit losses, and infrastructure costs. 2️⃣ Scheme Fee Charged by the card networks themselves, this fee covers the operation of the payment system (“rails” that process the transaction). 3️⃣ Acquirer Markup This is the fee your acquirer or payment service provider (PSP) charges you, the merchant. It includes their costs, risk management, and profit margin for processing and settling the payment. The total cost a merchant pays is called the Merchant Service Charge, which is the sum of these three components. The Main Pricing Models: ► Bundled Pricing All fees are grouped into one flat rate. This is very common with small businesses. It’s easy to understand but doesn’t provide insight into what you’re actually paying for. ► Interchange+ The interchange fee and the acquirer’s fee are shown separately, but the scheme fee is typically bundled with the markup. This model offers some transparency. ► Interchange++ Each fee—the interchange, scheme, and acquirer markup—is itemized separately. This is the most transparent model and is favored by larger or multi-country merchants who want to track costs precisely. Who Chooses the Pricing Model? Most acquirers and PSPs decide what pricing model you’re offered. Unless you negotiate or have significant transaction volume, you’re likely to get bundled pricing by default. Larger or more experienced merchants who understand payments often push for Interchange++ for its clarity and fairness. Smaller merchants often aren’t aware that alternatives exist or find it difficult to compare offers. How Interchange Fees Vary Globally: Some regions (like the EU, UK, China, and Brazil) cap interchange fees to lower costs for merchants and stimulate competition. The US regulates only part of the system—such as capping debit card fees for large banks (the Durbin Amendment)—while credit card interchange remains uncapped and usually higher. Other countries, like India and Brazil, regulate interchange as part of broader financial inclusion goals. In markets with stricter regulation, merchants often benefit from lower, more predictable fees, making it easier to accept cards. Where fees are higher and less regulated, issuers can offer consumers more rewards (like cashback), but those costs are passed back to merchants—and sometimes their customers. Every model shifts the balance of costs and benefits between banks, merchants, and consumers in different ways. More info below👇, and I highly recommend reading my complete deep dive article about Interchange Fee and what factors impact the rate: https://bit.ly/44T4VJA

Every card payment involves three core fees - yet most merchants don’t know where their money goes. Here is a break-down. 𝗧𝗵𝗲 𝟯 𝗳𝗲𝗲 𝘁𝘆𝗽𝗲𝘀: 1. Interchange – Paid from the acquirer to the issuer (the cardholder’s bank). Set by card networks, often regulated, and meant to cover fraud, credit risk, and infrastructure. 2. Scheme Fee – Charged by the card networks (Visa, Mastercard, etc.) for operating the rails. 3. Acquirer Markup – What the acquiring bank or PSP charges the merchant to process the transaction, handle risk, and settle funds. Together, these form the Merchant Service Charge. 𝗧𝗵𝗲 𝟯 𝗽𝗿𝗶𝗰𝗶𝗻𝗴 𝗺𝗼𝗱𝗲𝗹𝘀: 1. Bundled: All three fees are merged into one opaque rate. Common among smaller merchants. Simple, but lacks visibility. 2. Interchange+: Interchange and acquirer fee shown; scheme fee included in the markup. Partial transparency. 3. Interchange++: All three fees itemized. Full transparency. Preferred by larger or multi-market merchants. 𝗪𝗵𝗼 𝗱𝗲𝗰𝗶𝗱𝗲𝘀 𝘁𝗵𝗲 𝗺𝗼𝗱𝗲𝗹? - The acquirer or PSP typically offers the pricing model, and unless a merchant has the volume or experience to negotiate, they’re often placed on bundled pricing by default. - Larger merchants or platforms - who understand the mechanics and can estimate true costs - usually push for Interchange++ for its transparency and fairness. - Smaller businesses rarely ask, either because they don’t know the models exist, can’t easily compare offers, or assume it’s not worth the effort. 𝗜𝗻𝘁𝗲𝗿𝗰𝗵𝗮𝗻𝗴𝗲 𝗳𝗲𝗲𝘀' 𝗰𝗼𝗺𝗽𝗮𝗿𝗶𝘀𝗼𝗻: Some jurisdictions cap interchange fees (EU, UK, China, Brazil) to reduce merchant costs and promote competition. Others (US) regulate only parts of the system - e.g., debit under Durbin for large banks - while leaving credit cards uncapped. Why? It’s a mix of politics, lobbying, market structure, and regulatory philosophy: - In Europe, regulators treat interchange as  as insufficiently competitive and have imposed caps to bring more balance and transparency. - In the US, the market relies more on competition, resulting in higher fees. - Emerging markets like India and Brazil regulate interchange as part of broader financial inclusion efforts. - In regulated markets, lower and more predictable fees help merchants manage costs and often support broader payment acceptance. In unregulated markets, higher interchange allows issuers to fund consumer perks like cashback and rewards - but merchants may face higher costs, which can influence pricing or acceptance choices. Each model shifts value differently across the ecosystem, affecting how costs and benefits are distributed between banks, merchants, and consumers. What's your experience? Opinions: my own, Graphic sources: Paypr.work [ˈpeɪpəwəːk], Truevo, Panagiotis Kriaris 𝐒𝐮𝐛𝐬𝐜𝐫𝐢𝐛𝐞 𝐭𝐨 𝐦𝐲 𝐧𝐞𝐰𝐬𝐥𝐞𝐭𝐭𝐞𝐫: https://lnkd.in/dkqhnxdg

The fee you never see, but every merchant pays. Every time you tap a Visa, swipe a Mastercard, or spend with Revolut, the merchant doesn’t actually receive the full payment. A small percentage, sometimes less than 1%, sometimes over 3% is taken as the Merchant Discount Rate (MDR). It’s the cost of accepting card payments, and it powers the entire payments ecosystem. What makes MDR interesting is that it isn’t a single fee. It is a bundle: 🔹The interchange fee goes to the bank that issued your card (like Chase or HSBC). 🔹The scheme fee is collected by the network, Visa, or Mastercard, for running the rails. 🔹The acquirer markup is kept by the processor (Adyen, Stripe, Worldpay) that settles the transaction for the merchant. MDR may sound small, but scale changes everything. In Europe, regulators capped interchange at 0.2–0.3% to protect merchants. In India, Visa and Mastercard were pushed to cut MDR further to encourage digital adoption. In the US, where fees are higher, retailers have fought costly legal battles against the networks. For a café owner, MDR can decide whether a coffee is profitable. For Amazon, Netflix, or Uber, trimming even 0.1% can save millions each year. And when Revolut or Wise say “no foreign transaction fees,” they’re really absorbing or reshaping the MDR and FX costs to win market share. To put it in perspective: On a €100 card payment in Europe, the merchant might receive around €99.70. About €0.20 goes to the issuing bank, €0.05 to Visa or Mastercard, and €0.05 to the acquirer or processor. That missing 30 cents may look trivial. But multiplied across billions of transactions every day, it becomes the engine of modern payments. If regulators forced Visa and Mastercard to lower MDR globally, who do you think would win most? merchants, consumers, or fintechs? #Payments #Fintech #Banking #Visa #Mastercard #Revolut #Adyen #MerchantDiscountRate #RoanDollmann

I keep hearing leaders say, "Investment in Cybersecurity is expensive and just another cost center." That is not reality, it's an investment in your organization's ability to operate. Here is just one example to show some numbers and the cost difference between pro-active versus reactive cybersecurity: The cost difference between proactive cybersecurity and reactive cybersecurity is significant, as proactive measures aim to prevent threats before they occur, while reactive measures address incidents after they have happened. Here’s a detailed example to illustrate the cost difference: Scenario: A Mid-Sized Business Business Type: E-commerce company Size: 250 employees Annual Revenue: $50 million Cybersecurity Threat: Ransomware attack 1. Proactive Cybersecurity Costs Proactive measures include investing in tools, training, and services to prevent cyberattacks. Expense Estimated Annual Cost Endpoint Protection Software$25,000 Regular Penetration Testing$30,000 Cybersecurity Awareness Training$15,000 Managed Security Service Provider $50,000 Backup and Disaster Recovery Plan$20,000 Total Annual Proactive Costs$140,000 By implementing these measures, the business can significantly reduce the likelihood of successful attacks and minimize downtime in the event of an incident. 2. Reactive Cybersecurity Costs Reactive measures are taken after an attack has occurred. Let’s assume a ransomware attack encrypts critical data, halting operations for five days. Expense Estimated Cost Ransom Payment $250,000 Incident Response Team$50,000 Forensics and Investigation $40,000 Downtime Costs (5 days, lost revenue) $685,000 Legal Fees and Compliance Fines $100,000 Reputational Damage and PR Recovery $150,000 Identity Protection for Customers $75,000 Total Reactive Costs$1,350,000 The above costs DO NO account for long-term revenue loss due to brand damage, potential lawsuits, or customer churn, which could escalate further. Cost Comparison Approach Cost Proactive Measures $140,000/year Reactive Response $1,350,000+ Key Takeaways Proactive cybersecurity is a fraction of the cost of responding to an incident. Investments in prevention not only save money but also protect a business's reputation and customer trust. Organizations that prioritize proactive measures can avoid the cascading effects of a cybersecurity breach. This example demonstrates how "an ounce of prevention is worth a pound of cure" when it comes to cybersecurity.

Ever noticed $20–$30 missing from an inward remittance?  The invoice says $1,000. The client confirms they sent $1,000. But you see only $970–$980. Most assume it’s a forex markup or some routine bank charge. But here’s the nuance almost no one talks about: international wire transfers often travel through 𝗺𝘂𝗹𝘁𝗶𝗽𝗹𝗲 𝗶𝗻𝘁𝗲𝗿𝗺𝗲𝗱𝗶𝗮𝗿𝘆 𝗯𝗮𝗻𝗸𝘀 before they land in your account. The frustrating part is, these deductions are rarely upfront. Exporters don’t know in advance which intermediaries will be used, how many hops there’ll be, or how much each will shave off. It feels random, almost like a “toll tax” for moving money across borders. For a single transaction, it looks small. But run 50–100 invoices a year, and you’ve lost thousands of dollars without ever being told why. These are the hidden complexities of cross-border payments that don’t get discussed enough. Most first-time exporters don’t even realise this is happening until they compare notes with peers, or worse, when their margins start looking thinner than planned. 𝗔𝘁 𝗦𝗸𝘆𝗱𝗼, 𝘄𝗲’𝘃𝗲 𝗯𝘂𝗶𝗹𝘁 𝗮 𝘀𝘆𝘀𝘁𝗲𝗺 𝘄𝗵𝗲𝗿𝗲 𝗶𝗻𝘁𝗲𝗿𝗺𝗲𝗱𝗶𝗮𝗿𝘆 𝗯𝗮𝗻𝗸 𝗰𝗵𝗮𝗿𝗴𝗲𝘀 𝗮𝗿𝗲 𝟬. But even if you’re not using us, this is something worth knowing. Because in cross-border trade, the devil isn’t just in the exchange rate. It’s in the tiny, invisible charges no one tells you about.

Loan liya? Kahin aap hidden charges ke jaal mei toh nahi fase? Loans often come with costs beyond just the interest rate. Here are some hidden charges to watch out for: ❎ Processing Fee: Usually 1-3% of loan amount. On a ₹10 lakh loan, that's ₹10,000-30,000! ❎ Pre-payment Penalty: Want to pay off your loan early? You might have to pay for that privilege! ❎ Late Payment Fees: Miss a payment date, and you could be charged 1-2% of your EMI. ❎ Insurance Premiums: Some lenders insist on loan protection insurance. It's often overpriced. ❎ Documentation Charges: From ₹500 to ₹5000, depending on the lender and loan amount. ❎ GST: 18% GST applies on most of these charges. It adds up! Why these matter: ❌ They increase your overall cost of borrowing ❌ They're often not prominently displayed ❌ They can significantly impact your financial planning How to protect yourself: ✅ Always ask for a complete list of charges before signing ✅ Compare the total cost of the loan, not just interest rates ✅ Negotiate! Many of these fees are flexible ✅ Read the fine print carefully The lowest interest rate doesn't always mean the cheapest loan! #loan #personalfinance #BrahmiKapasi

Managing card transactions involves a lot of data. It’s important to understand not only what the different types of data mean, but also the underlying compliance responsibility associated with this. There are different levels of transaction processing and these are categorised based on the amount of data sent. In the industry, these distinctions are known as card processing Level 1, Level 2 and Level 3. These levels dictates how transactions get qualified or disqualified by the schemes. #didyouknow 💡 Each level is defined by the amount of information that is required or passed to complete a payment, with Level 1 having the lowest requirements and potentially the highest costs💡. ⬛ 𝐋𝐞𝐯𝐞𝐥 𝟏 data are the standard transaction details that pretty much every gateway/PSP capture. This typically refers to B2C transactions. ⬛ 𝐋𝐞𝐯𝐞𝐥 𝟐 data refers to more variable transaction information typically designed to support B2B payment processing. ⬛ 𝐋𝐞𝐯𝐞𝐥 𝟑 requires the capture of specific line item data that defines 𝐰𝐡𝐚𝐭 is being purchased, 𝐡𝐨𝐰 the sales takes place, 𝐰𝐡𝐨 is involved in the transaction, and 𝐰𝐡𝐞𝐧 it takes place. Level 2 and 3 transactions provide valuable data to both the merchant and the PSP and are predominantly use in B2B, government, airline industry and industry with large tickets items. 𝐒𝐨 𝐰𝐡𝐲 𝐝𝐨𝐞𝐬 𝐋𝟐 𝐚𝐧𝐝 𝐋𝟑 𝐝𝐚𝐭𝐚 𝐦𝐚𝐭𝐭𝐞𝐫? ⬛ Card transactions submitted with Level 2 and Level 3 card data can obtain lower interchange rates and provide merchants with a lower processing cost. ⬛The exact discount depends on the level of the transaction and, in some cases, the actual amount of the transaction. Savings can range between 0.2% to 1%+ on the interchange. ⬛The interchange fees make up 70%-85% of the card processing fees, hence why level 2/3 processing can be so vital. For merchants, benefiting from a level 2 or level 3 transaction discount requires layers of additional data to be captured at the time of a transaction and to be formatted according to the schemes rules. That said, not all PSPs are equipped with the technology to capture L2 or L3 data! #paymentsexperts, any perspectives to add🎤? --- 𝑳𝒊𝒌𝒆 𝒕𝒉𝒊𝒔 𝒄𝒐𝒏𝒕𝒆𝒏𝒕? 𝑯𝒐𝒘 𝒄𝒂𝒏 𝑷𝒂𝒚𝒑𝒓.𝒘𝒐𝒓𝒌 𝒉𝒆𝒍𝒑? 𝘞𝘦 𝘢𝘳𝘦 𝘗𝘢𝘺𝘮𝘦𝘯𝘵𝘴 𝘚𝘵𝘳𝘢𝘵𝘦𝘨𝘪𝘴𝘵𝘴 𝘤𝘰𝘯𝘯𝘦𝘤𝘵𝘪𝘯𝘨 𝘣𝘶𝘴𝘪𝘯𝘦𝘴𝘴𝘦𝘴 𝘵𝘰 𝘳𝘦𝘭𝘪𝘢𝘣𝘭𝘦 𝘍𝘪𝘯𝘵𝘦𝘤𝘩 𝘱𝘢𝘳𝘵𝘯𝘦𝘳𝘴. 𝘉𝘭𝘦𝘯𝘥𝘪𝘯𝘨 𝘰𝘶𝘳 𝘱𝘢𝘺𝘮𝘦𝘯𝘵𝘴 𝘬𝘯𝘰𝘸𝘭𝘦𝘥𝘨𝘦 𝘸𝘪𝘵𝘩 𝘰𝘶𝘳 𝘤𝘳𝘦𝘢𝘵𝘪𝘷𝘦 𝘧𝘭𝘢𝘪𝘳, 𝘸𝘦 𝘥𝘦𝘷𝘦𝘭𝘰𝘱 𝘴𝘵𝘳𝘢𝘵𝘦𝘨𝘪𝘤 𝘤𝘰𝘯𝘵𝘦𝘯𝘵 𝘢𝘯𝘥 𝘵𝘩𝘰𝘶𝘨𝘩𝘵 𝘭𝘦𝘢𝘥𝘦𝘳𝘴𝘩𝘪𝘱 𝘢𝘴𝘴𝘦𝘵𝘴 𝘧𝘰𝘳 𝘪𝘯𝘥𝘶𝘴𝘵𝘳𝘺 𝘭𝘦𝘢𝘥𝘦𝘳𝘴. 𝘞𝘦 𝘢𝘭𝘴𝘰 𝘥𝘦𝘭𝘪𝘷𝘦𝘳 𝘱𝘢𝘺𝘮𝘦𝘯𝘵𝘴 𝘵𝘳𝘢𝘪𝘯𝘪𝘯𝘨 𝘪𝘯 𝘰𝘶𝘳 𝘢𝘶𝘵𝘩𝘦𝘯𝘵𝘪𝘤, 𝘷𝘪𝘴𝘶𝘢𝘭𝘭𝘺 𝘦𝘯𝘨𝘢𝘨𝘪𝘯𝘨 𝘢𝘱𝘱𝘳𝘰𝘢𝘤𝘩. ✅ Follow Paypr.work [ˈpeɪpəwəːk] ✅ Let's collab 📧intro@paypr.work ✅ Visit: https://paypr.work

Unlocking More Revenue: The Hidden Power of Level 2/3 Processing 💡 Most platforms treat payments like plumbing, essential, but invisible. As long as the money flows, it’s out of sight, out of mind. But what if your payment infrastructure could do more than just move money? What if it could actually make you money? Many companies unknowingly leave revenue on the table by not tapping into interchange optimization tools like Level 2 and Level 3 data. Payment optimization is the secret ingredient that transforms operations from a cost center into a growth engine 👨💻 Level 1 transactions include standard data such as the card number, expiration date, and billing address. While this basic information is necessary, passing additional data to the card networks can significantly reduce your interchange rates. This is where Level 2 and Level 3 processing come into play: Level 2 transactions add details like the tax amount, customer code, and purchase order information. Level 3 transactions go even further by including comprehensive line-item details such as item descriptions, quantities, unit costs, freight amounts, and more. Card networks, especially Visa and Mastercard, incentivize merchants to provide this richer data by lowering interchange fees. This benefit is particularly valuable for high-ticket transactions common in industries like B2B, SaaS, education, and wholesale 💳 Level 2 and Level 3 data aren’t just buzzwords, they’re powerful levers for reducing interchange costs. By submitting richer transaction data, like invoice numbers, tax amounts, and customer codes—businesses help reduce fraud and chargeback risk for card networks. In return, networks reward this added transparency with lower interchange rates. Here are three real-world examples that show how platforms across industries unlock meaningful savings and streamline payment operations: 🔹 B2B SaaS Platform: A SaaS company offering procurement software enabled Level 3 data through Finix. With an average transaction size of $2,200, they saved approximately 4.25% in interchange fees over six months, totaling $47,000 in savings. 🔹 Education Marketplace: A platform that facilitates bulk textbook orders for universities activated Level 2/3 support. This move not only simplified invoicing but also led to $20,000 in savings (2.25% in interchange fees) over a single semester. 🔹 Franchise Payment Systems: A national franchise network leveraged Level 3 data to centralize payment reporting, stay compliant, and negotiate better rates with issuing banks—turning payment complexity into cost efficiency. Platforms are entering a new era of payment ownership. Interchange optimization through Level 2 and Level 3 processing isn’t a nice-to-have—it’s a necessity for scaling profitably. Source: Finix - https://shorturl.at/43NhY #Innovation #Fintech #Banking #Marketplace #FinancialServices #Cards #Payments #Processing #Interchange #Data #SaaS 

Are hidden charges quietly draining your savings account? Most people think of their savings account as a safe space — but that safety often comes with silent costs. Banks may charge you for things you didn’t even realise were billable: – Cash deposits after a certain limit – SMS alerts – Debit card renewals – Branch transactions – Non-maintenance of minimum balance Over time, these small deductions can add up to thousands each year. And most of us don’t even notice until it’s too late. I’ve personally seen this happen to individuals who are otherwise financially careful. And it is all because no one reads the fine print. Here’s how to stay one step ahead: a) Check the ‘charges’ section on your bank’s official website b) Review your last 3 monthly statements - and actually read the debit entries c) Switch to banks with zero-balance or digital-friendly accounts if needed Small leaks can sink even the biggest financial ships. Don’t let hidden charges eat into your hard-earned money. Share this with your friends and family. #personalfinance #indianbanking #moneytips #savingsaccount #hiddencharges #finfluencerindia #financialliteracy #smartmoney #bankingawareness #moneyhacks #financialplanning #bankcharges #savingshack #financialeducation #indianfinance

The Hidden Cost of “Paying in Your Currency” Abroad Dynamic Currency Conversion (DCC) lets travelers pay in their home currency at foreign merchants, but this convenience often comes at a steep price. Let’s unpack how it works and why savvy shoppers opt out. How DCC Works: A Tourist Trap? When you swipe your card abroad (e.g., a Euro card in Dubai): The POS terminal detects your foreign card and pings the acquirer (like Worldpay). The DCC provider calculates the exchange rate + a 3-7% markup (Visa). You choose: pay in AED (local) or EUR (home currency). If you pick EUR, the merchant pockets the markup, costing travelers $4.6B annually (McKinsey). The Fine Print Most Miss Card networks mandate transparency, but loopholes exist: Pre-selected DCC: 40% of ATMs default to home currency, hiding fees until checkout (Juniper). Biased UX: Buttons like “Pay in EUR” (green) vs “Continue in AED” (red) nudge users toward markups. Neobanks Fight Back Challenger banks like Revolut and Wise block DCC by default, routing transactions through their own low-margin FX rates. Result? Users save 5-8% per transaction compared to traditional banks. Why It Matters DCC isn’t inherently evil—it’s about informed choice. Yet 68% of travelers don’t realize they’re paying extra (Statista). Always: ✅ Decline DCC and let your bank handle conversion. ✅ Use multicurrency cards (e.g., Wise, N26) for near-interbank rates. Next time you travel, remember: “Pay in local currency” is the golden rule. IF you want to learn how to build your neobank - Check the comment. Source: Roger Abouantoun Stats: Visa, McKinsey, Juniper, Statista #DigitalPayments #Fintech #DCC #TravelHacks