Card Scheme

Card schemes are the rule-setters and infrastructure operators at the center of the global card payment ecosystem. Every card transaction — whether in-store, online, or contactless — flows through the scheme’s rules and systems. Understanding how schemes operate is foundational to understanding payment economics and compliance obligations.

Four-Party vs. Three-Party Schemes

Four-party schemes (open loop): Visa and Mastercard are the dominant examples. The four parties are:

1. The cardholder
2. The issuing bank (issues the card to the cardholder)
3. The acquiring bank (holds the merchant account)
4. The merchant

The scheme operates the network between issuer and acquirer but does not hold funds or directly issue cards. Revenue comes from scheme fees charged to issuers and acquirers on each transaction.

Three-party schemes (closed loop): American Express and Diners Club historically issued their own cards and acquired merchants directly — collapsing the four-party model into three. This gave them direct control over the cardholder and merchant relationship but limited scale. AmEx has since moved toward a hybrid model, allowing third-party bank issuers in many markets while retaining network ownership.

Domestic schemes: Many markets have domestic card schemes alongside the global networks. Examples include RuPay (India), UnionPay (China), Elo (Brazil), Cartes Bancaires (France), NETS (Singapore), and BancNet (Philippines). These schemes typically have different interchange economics, scheme fee structures, and technical standards than Visa/Mastercard.

Scheme Rules and Compliance

Card schemes publish detailed operating rules — Visa’s core rules and Mastercard’s rules documents run to thousands of pages. These rules govern everything from merchant category code assignment to chargeback procedures, authentication requirements, and data security standards.

Compliance with scheme rules is enforced through:

• Fines and assessments: Schemes can levy fines on issuers and acquirers for rules violations (excessive chargeback rates, PCI non-compliance, MCC misuse)
• Registration requirements: Merchants above certain volumes, payment facilitators, and other intermediaries must be registered with schemes
• Network participation: Non-compliant members risk suspension of network access

Scheme Fees

Scheme fees are distinct from interchange and are charged directly by the card network. They include:

• Assessment fees: Basis points on gross transaction volume
• Authorization fees: Per-transaction fees for authorization messages
• Cross-border fees: Additional fees when the issuer and acquirer are in different countries
• Integrity fees: Applied when transaction data quality fails network standards

Scheme fees are typically 0.1–0.3% of transaction value and are generally non-negotiable for most merchants and PSPs. Large acquirers with significant volume may negotiate scheme fee rebates, but these are not publicly disclosed.

Southeast Asia Scheme Landscape

Southeast Asia has a fragmented scheme landscape:

• Visa and Mastercard are present in all SEA markets and dominate international and premium card volume
• UnionPay has significant issuance particularly in markets with large Chinese populations and tourism flows
• JCB (Japan Credit Bureau) has issuing presence in several SEA markets, including Thailand and Indonesia
• Domestic QR and real-time schemes — PayNow, PromptPay, DuitNow, QRIS, InstaPay — are growing rapidly, operating outside the traditional card scheme model entirely

For PSPs acquiring in SEA, supporting both international card schemes and domestic payment methods is essential. The economics differ significantly: domestic real-time payments typically carry lower fees than international card scheme transactions.