Network costs consist of which fees?

• A. Interchange fee + scheme fee
• B. Interchange fee + processor fee
• C. Interchange fee + network fee
• D. Scheme fee + processor fee

Answer: (A)

Network costs are the charges the card networks apply for handling the transaction. They consist of two parts: the interchange fee, paid from the merchant’s acquiring bank to the issuer to cover cardholder costs and network risk, and the scheme (or assessment) fee, charged by the card networks themselves for using their network and services. The processor’s fee is separate, charged by your payment processor for its service, not part of the network charges. Since interchange and scheme fees are set by the networks and vary by card type, region, and merchant category, they’re the two components that make up the network costs.