Card payments include three distinct fee components: Wholesale Interchange (paid to card issuing banks, capped under EU IFR 2015/751 and US Durbin Amendment), Scheme Assessments (paid to Visa and Mastercard for clearing and brand licensing), and Acquirer Markup (the payment processor's margin).
Key Architectural Comparison
Blended Flat-Rate: The processor charges a fixed fee (e.g. 2.9% + $0.30) regardless of the card presented. Predictable, but the processor retains all margin savings on low-cost consumer debit cards.
Interchange Plus Plus (IC++): Passes through actual wholesale interchange and scheme assessments directly to the merchant with a clear, negotiated markup, unlocking significant cost reductions for favorable card mixes.
Interchange Downgrades: Transactions missing Address Verification (AVS), CVV validation, or settling past 24-48 hours downgrade to Standard or EIRB qualification tiers, increasing interchange costs by 50 to 100+ basis points.