Card payments look simple at checkout, but each one has a complicated cost structure set by Visa, Mastercard, and the issuing bank. How you buy this bundle from your acquirer can impact your profit margin.
We built the Blended vs IC++ Pricing simulator on nornhill.com because product and payments teams often ask themselves whether they are paying too much under a flat rate or whether switching to pass-through pricing could save money after improving their card mix.
This article explains the different types of fees, how they work, what influences them, and where you can actually negotiate.
The three cost layers
A card payment includes three separate fees, not just one as your processor may have said.
Interchange is the wholesale fee paid to the cardholder’s issuing bank. It is usually the largest part of the total card cost, accounting for about 70-90%. Card networks set the rates, and issuers get the money. While you cannot negotiate interchange directly, you can influence which interchange category applies to your transactions.
Scheme Assessment covers network infrastructure, clearing, and brand fees charged by Visa or Mastercard. It is the first + in IC++. These are usually shown as a percentage plus a fixed fee, for example, about 0.08% for Visa in Europe, plus a small amount per transaction. But it could also be a 1.028%, as it depends on the product and region.
Acquirer Markup is the margin your payment processor keeps for services like authorisation, settlement, risk management, reporting, and support. It is the second + in IC++. This is the only fee layer you can really negotiate.
Blended vs Interchange Plus Plus
A Blended Flat Rate combines all three fee layers into a single fixed price, such as 2.9% + $0.30. It is a well-known fee formula widely used by Stripe. This makes costs easy to predict and explain within your company. The processor takes on the risk of price changes and keeps any extra margin from low-cost transactions.
Interchange Plus Plus (IC++) passes through interchange and scheme fees at their actual cost, then adds two clear markups: one for the scheme and one for the acquirer. This way, you can see exactly how much goes to the network, the issuer, and your processor.
When is IC++ a better choice? Flat blended rates are based on the highest-cost scenarios, like cross-border or corporate cards. If most of your transactions are consumer debit or domestic credit, you lose a lot of margin with blended pricing. Switching to IC++ lets you see the real wholesale costs and save money right away.
When is blended pricing better? If you process a lot of international, premium rewards, commercial cards, or card-not-present transactions without 3DS, a flat rate might be cheaper because the provider covers the high interchange costs. As Mollie points out, IC++ helps you benefit from low domestic rates, but blended pricing can be more cost-effective for businesses with many international or premium payments.
What drives interchange
Interchange is not one number. Card networks publish hundreds of categories. The rate you get depends on:
Card product
- Debit vs credit. Debit is cheaper. In the EEA and UK, consumer debit is capped at 0.20% and consumer credit at 0.30% by regulation.
- Premium rewards vs basic. Premium cards carry higher interchange to fund rewards.
- Consumer vs commercial. Commercial, corporate and purchasing cards are unregulated and can be 1.50% to 2.50%+. Worldpay shows Visa Commercial Credit at 1.40% to 2.00% and Mastercard Commercial Credit at 1.65% to 2.25%.
Region and routing
- Domestic vs intra-regional vs inter-regional. EEA domestic consumer cards are capped. The cross-border UK-EEA card not present rate can be 1.15% for debit and 1.50% for credit.
- Local acquiring matters. Adyen explains that costs are much lower when transactions are processed through a local acquirer within the same region. Cross-border transactions are typically subject to significantly higher interchange rates.
Transaction environment
- Card present vs card not present. CP with chip and PIN is lower risk than CNP. Stripe notes that online payments are more expensive because they carry higher fraud and chargeback risk.
- 3D Secure and network tokenisation. Implementing 3DS and DPAN tokens can move you into lower interchange categories and avoid clear-text PAN downgrades.
Merchant Category Code
- MCC defines your risk profile and eligibility for specialised rates. Supermarkets, utilities, education and government can access lower caps. Worldpay notes that Visa Everyday Spend MCCs 4111, 5411, 5541, etc., can qualify for reduced scheme fees.
Data quality and settlement hygiene
- AVS, CVV, Level 2/3 data. For B2B, supplying the tax amount, invoice number, and line-item details can reduce commercial card interchange.
- Settlement timing. JPMorgan’s guide stresses settling within 24 hours for retail and within 2 days of the ship date for e-commerce to avoid downgrades.
Scheme fees you cannot ignore
Scheme fees are one of the +. They are smaller than interchange, but they compound, especially on refunds and authentication events.
Visa and Mastercard publish country-level interchange PDFs. Mastercard’s UK hub explains that interchange is set to balance acceptance and issuance incentives. Visa Europe lists inter- and intra-EEA categories separately.
Refunds also attract scheme fees. Worldpay notes Mastercard refunds are charged as per a sale transaction, and Visa refunds outside EEA can be 0% interchange returned.
How blended pricing hides margin
A blended rate like 2.9% + $0.30 seems predictable. But if 60% of your transactions are UK domestic debit, capped at 0.20% plus about 0.03% for scheme fees, the processor keeps an extra 2.6% on those payments. This extra margin helps cover their losses on high-cost transactions, like US corporate rewards cards with 2.6% interchange.
IC++ makes this cross-subsidy clear. For example, you pay 0.20% + 0.03% + an acquirer markup, say 0.07%, on debit cards, and 2.6% + scheme fees plus 0.07% on corporate cards. If most of your transactions are debit, your average cost can be much lower than 2.9%.
Nuvei explains it well: IC++ separates the interchange paid to the issuing bank, the scheme fee paid to the network, and the acquirer markup. This transparency is why many enterprises prefer IC++ for detailed cost control.
Negotiation levers that actually work
You cannot negotiate the interchange rates themselves, but you can negotiate everything else related to your payments.
Acquirer markup
This is the second plus in IC++. Compare it on a basis points plus a fixed fee per transaction basis. For high-volume merchants in Europe, rates of 5 to 15 basis points + $0.05 are possible. Ask your provider about volume tiers and commitment thresholds.
Scheme fee pass-through
Insist on true pass-through with no padding. Some PSPs blend scheme fees into markup. Ask for monthly scheme fee invoices broken by Visa FANF, Mastercard Acquirer Program Support, etc.
Card mix optimisation
- Increase debit share via local payment methods, e.g. iDEAL, Bancontact, Pix. Nuvei notes that alternative payment methods often have lower processing costs than international card networks.
- Send domestic transactions through local acquirers. Using local acquiring removes cross-border surcharges, which can be as high as 2%, and also helps improve approval rates.
Authentication and data quality
- Enable 3DS2 and network tokens. Adyen says security tools like AVS can trigger lower interchange categories.
- Send Level 2/3 data for B2B. JPMorgan recommends including verification support, AVS and cardholder verification data to improve interchange qualification.
MCC and settlement hygiene
- Check your MCC assignment. Having the wrong MCC can put you in a higher risk category.
- Settle transactions every day. According to JPMorgan’s best practices, settling late often leads to downgrades.
Refund and dispute discipline
High chargeback ratios trigger risk premium markups. Solidgate advises using AVS to reduce fraud and chargebacks, which can lead to increased interchange.
Contract terms
- Request IC++ pricing with interchange and scheme fees at cost, and a fixed acquirer markup for 24 months.
- Cap cross-border fees or get separate pricing for domestic vs inter-regional.
- Negotiate to remove minimum monthly fees if you agree to volume commitments.
Merchant Negotiation Leverage Profile
How to decide which model fits you
We use a simple decision framework in our simulator. Input your business profile:
- Monthly processing volume and transaction count to derive AOV
- Card mix: domestic debit %, domestic credit %, international %, commercial %
- Current blended rate and fixed fee
Set negotiation levers:
- Card present ratio
- Network token and 3DS adoption
- MCC profile
- Settlement window
- Dispute and refund rates
The model matches your card mix to Visa and Mastercard wholesale interchange tables, adds scheme fees from Worldpay’s rate card, and includes the acquirer markup. It then compares your annual blended cost to the IC++ cost. Yes, Worldpay's rates are not the best, but they are real and sufficient for the simulation to avoid misleading you or being overly optimistic. So even after that, you know that you can negotiate those fees.
Practical checklist for product managers
- Pull a 3-month sample of authorisations with card product, region, CP/CNP flag, 3DS result, MCC and settlement lag.
- Classify each transaction into Visa and Mastercard interchange buckets using the EEA tables.
- Calculate weighted average interchange + scheme.
- Add target acquirer markup, e.g. 0.10%.
- Compare to the current blended effective rate.
If weighted wholesale + markup is >50 bps below the blended rate, start an IC++ RFP.
Regulatory context to watch
- EEA/UK caps: 0.20% debit, 0.30% credit for consumer cards. Business cards are uncapped.
- UK-EEA cross-border: post Brexit, cross-border fees jumped to 1.15% debit and 1.50% credit for CNP. The UK PSR is pushing for a new cap.
- US: no federal cap, premium rewards drive interchange above 2%.
Stripe’s guide reminds that interchange is typically a percentage plus a fixed fee, and networks update tables twice a year. Plan a biannual pricing review.
Final thought
Blended pricing gives you simplicity. IC++ gives you more control.
For product teams, control is important when you can influence factors like routing to local acquirers, using network tokens, improving 3DS adoption, updating MCCs, and settling on time. These actions help you qualify for lower interchange rates, and with IC++ you keep those savings.
We developed the Blended vs IC++ Pricing simulator to help you see this trade-off clearly. Use it to model your current card mix, try out negotiation scenarios, and decide whether greater transparency into payment costs is warranted.