Interchange+ (IC+) and Blended Pricing
When processing transactions online, dealing with interchange fees (IC) and scheme fees (SC) can be challenging:
It's not always clear for what exactly acquirers and card brands charge that money. Moreover, the trend of increasing these fees might add to that confusion.
Therefore, we are happy to provide you with both a detailed explanation and an two models managing these fees.
2. Understand interchange fees and Scheme fees
Interchange fees cover the cardholder’s bank (the issuer) cost related to lines of credit and fraud mitigation. The merchant bank, your bank, (the acquirer) pays this fee to the issuer. For each transaction, the total amount due depends on various factors, among others:
- The geographical location of your company and the cardholder's bank
- The Average Transaction Value (ATV)
- Payment method used (debit / credit card)
- Card type (consumer / commercial card)
Please note that these rates apply for the EEA region. For other regions, different fees may apply.
Interchange fees are not negotiable, but are capped for European consumer* card (not corporate cards) by EU regulations (to 0.3% for credit cards payments and to 0.2% for debit cards).
Due to the Interchange Fee Regulation (IFR) and other recent developments such as Brexit and the introduction of PSD2, the general trend is that both interchange and scheme fees are prone to changes (ie. Scheme fees are expected to increase in the future). To help you manage these fees, we offer Interchange+ and Blended pricing via our Full Service model.
Although this fee is defined by the card brands (i.e. Visa, MasterCard who are also known as schemes), you should not confuse it with the scheme fee. Your acquirer pays scheme fees to the card brands to cover their maintenance costs for providing their payment network. The total amount is composed of assessment fees, cross-border fees, clearing and settlement fees. Similarly, to the Interchange fee, the total amount depends on the card type used and the geographical location of your acquirer.
3. Understand Interchange+ (IC+) and Blended Pricing models
Depending on your business model, either the IC++ or the Blended pricing will suit your needs best. Our colleagues from our Sales department are at your service to help choose the best option for you:
- IC++ combines the Interchange fee, the Scheme fee and an additional percentage of the transaction amount value to one fixed price per transaction. IC++ is a passthrough model and therefore subject to cost swings
- Blended Pricing applies a fixed percentage of the transaction amount value. All Interchange, network dues and assessment fees are covered, the Blended Pricing protects you against cost swings (especially IC & SF price increase) and card mix.