Understanding Card Processing Fees: Interchange, Scheme Fees, and Markup Explained

Card economics involve several fee layers before funds settle. Finance and product teams stay aligned when each layer is named, measured, and tied to contract terms and reporting extracts. This overview uses generic industry terms; your agreements and statements remain the source of truth for exact rates.

Interchange

Interchange is paid into the issuing side of the ecosystem and is categorized by card product, merchant type, region, and transaction characteristics. It is usually not negotiated per individual merchant in program arrangements; instead teams model it from historical mix and ticket sizes.

Track interchange as a percentage of spend by segment so pricing and product decisions reflect real behavior, not a single blended assumption.

Scheme assessments

Card networks charge assessments and per-transaction fees for routing, security features, and data services. These often appear as separate invoice lines. Forecast them alongside volume so new product modes do not silently compress margin.

Processor and program fees

Processors and program managers add charges for authorization, settlement, exceptions, disputes, and servicing. Compare basis points together with minimums, decline fees, and chargeback handling costs. Very low auth pricing can be expensive if exception workflows require manual operations.

FX and cross-border

When authorization currency differs from settlement currency, foreign exchange can dominate unit economics. Document reference rates, markup policy, and whether FX is passed through to customers or absorbed. Publish internal guidance so customer-facing quotes match settlement reality.

Transparent fee views—dashboards and reconciled exports—reduce billing disputes and help product teams reason about trade-offs without guesswork.