The Cost of Payments

June 28, 2022

The Cost of Payments

When a Merchant signs up for online payments, they are charged a fee for each transaction that is made. This fee can be one of two pricing models, known as “interchange ++” and “blended”.

Interchange ++

The interchange ++ pricing model is designed to be the more transparent of the two, with the Merchant paying the interchange fee separately to the Merchant Services Charge (MSC). But, what does interchange ++ mean?

Interchange Fee

The interchange fee is a cost charged to the acquiring (merchant’s) bank by the issuing (cardholder’s) bank. This fee incentivises banks to keep transactions secure and occurs every time a card payment is made, be that chip and pin or e-payments.

Card Scheme Fee (+1)

The first “+” denotes the card scheme fee. This is a fee paid to a card scheme, such as VISA or Mastercard, by the acquiring bank.

Acquirer Fee (+2)

The second “+” represents the acquirer fee. The acquirer fee is a fee charged by the acquiring bank for their services during a transaction.


Within the blended pricing model, the interchange fee and MSC are charged together to the Merchant in one combined, or blended, figure. This often will include a mark up fee as well, and therefore means it is not always the most cost-effective method to facilitate transactions. Due to different card schemes having different costs per transactions, the mark up ensures you will always be paying the price of the highest card scheme, even if they’re not used in the transaction.

Merchant Services Charge

The Merchant Services Charge (MSC) is the combined cost of the card scheme, interchange fee, and acquirer fees.

Authorisation Fee

The authorisation fee is a fee charged by the issuing bank to cover the cost of its services. Instead of being a percentage like the other types of fees mentioned, this is a “pence per transaction” fee, usually ranging between 2-10p. This fee is also charged during interchange ++ transactions.

What is Best for my Merchant?

When deciding what type of transaction fee a Merchant should pay, it is always important to consider the following:

  • With interchange ++, the Merchant receives a much more transparent view of what fees they are being charged. This is a flexible model, with the amount a Merchant pays depending on the card scheme and banks involved in each transaction.
  • Blending pricing offers a simpler overview, and is often good for Merchants with small transaction volume (under 50 a month) as it is easy to set up and understand. However, Merchants could be overpaying compared to what they would be charged with the interchange ++ model.

To learn more about the price of transactions, and how Cardstream can help facilitate your payments, why not look at our Knowledge Hub or Contact Us.