Scheme fees 101: Why accurate calculation matters
Scheme fees are a fundamental but often misunderstood cost in the payments ecosystem. Charged by card networks for processing transactions and related actions, these fees can vary by country, transaction type, and even individual network rules. In this blog, we break down what scheme fees are, how they work, and why accurately calculating them at transaction level is critical for transparency, cost control, and scalable pricing models like IC++.
What are scheme fees?
Scheme fees or card network fees are the costs are client incur from being members of and processing transactions with a card network. These fees can be non-transactional (fixed) or transactional (variable) or semi-variable. The fees are often specific to the country the merchant is located on.
What is the scheme fee service?
The scheme fee service is designed to calculate transaction level scheme fees for actions performed on our platform across Authentication, Authorization, Clearing and Disputes in close to real time as possible. The service is designed to replicate the billing logic that Card networks use as part of their billing systems. Our accuracy target is 95% and we frequently exceed that. The service is also able to trigger fees that are unique to a particular client, for example "Dynamic currency matching fees" for Mastercard or "CAS" fees for Visa.
The value this service delivers is two fold:
Enables clients to allocate scheme fees to individual actions/transactions so that these can be passed onto their merchants accurately and support IC++ pricing models.
Enables clients to understand what actions/transactions triggered fees that are then aggregated and invoiced to them on a weekly, monthly or quarterly basis.
The fees themselves can be a combination of count or volume based e.g., 2c per 3DS authentication or 0.9 basis points on a transaction amount (0.009%). The fees can have multiple tiers, be a credit or debit and have a defined or dynamic billing currency.
Facts about the service:
The service currently supports 30 different parameters to determine what fees should be triggered for a particular action.
The service currently supports: Mastercard, Visa, Bancontact and Discover
The rule library currently has over 2000 rules
We currently support scheme fee calculation in 32 countries
In a typical 24 hours period it is calculating 7.5M individual scheme fees
Scheme fees don’t have to be a black box. With accurate, near real-time calculation, payment providers can gain full visibility into what drives their network costs and pass those fees on with confidence.
Want to learn how Silverflow helps you calculate, allocate, and understand scheme fees at scale? Get in touch with our team to see how our scheme fee service can support your payments operations.
By Michael Barret
Group Product Manager at Silverflow
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