Card interchange and fees

A card program’s monthly revenue depends on the transactions that cleared, the interchange assessed on those transactions, and the program’s fee plan. Authorization volume alone does not determine earnings.

Interchange and scheme fees

The acquirer is the financial institution that processes payments for the merchant. The issuer is the financial institution that issues the card. For a purchase, the acquirer pays interchange to the issuer at a rate Visa sets by card type, presentment channel, and other transaction characteristics. Interchange compensates the issuer for its participation in the transaction. Visa publishes its interchange schedules; the amount assessed on a particular transaction arrives with clearing.

Scheme fees are charges for services provided by the card network. Visa charges acquirers and issuers for their respective use of the network. These charges are separate from interchange paid between the acquirer and issuer. An interchange credit therefore does not, on its own, describe the program’s net earnings after fees.

When earnings are recorded

Authorization is the issuer’s approval of a requested transaction and can place a hold on funds. Clearing is the acquirer’s submission of the transaction’s final financial details. Settlement is the resulting movement of funds. The Card payment lifecycle describes how these messages become entries and Transactions in Increase.

Interchange and the associated clearing fees arrive on the Card Settlement when the transaction clears. An authorization does not establish an interchange receivable. If it expires or is reversed without clearing, there is no settled purchase from which to earn interchange. A purchase that is authorized in June and clears in July contributes to July’s revenue.

When a purchase is refunded, interchange flows back from the issuer to the acquirer. Use the interchange amount reported with the refund rather than calculating it from the original purchase. A refund recorded in July reduces July’s revenue even if the purchase cleared in June. Refunds have their own Card Payments, so a report restricted to the original purchases will miss them. Scheme fees can also be assessed or adjusted on refunds; a refund does not imply that every original fee is returned.

You can inspect the interchange and individual scheme fees for a transaction on its Card Payment object. The settlement or refund entry contains interchange and scheme_fees, which report the assessed amounts and identify the types of scheme fees charged.

Monthly revenue payments

For programs whose fee plan provides for passing through card revenue, Increase pays the previous calendar month’s recorded revenue on the first day of the following month. Eligibility is determined using the fee plan effective at the start of the revenue period.

The payment appears as a Card Revenue Payment Transaction. Payments are calculated separately for each Account and network and include revenue adjustments recorded during the period. Increase credits the Account where the card activity occurred, or the program’s designated card revenue Account if one is configured. A program with several Accounts can therefore receive several payment Transactions, including several into the same destination Account.