Learn about the operational challenges and risks associated with compliance with payment networks like Visa and Mastercard and find out how to simplify this process and make it more manageable and efficient.

Scheme Compliance

 recent investigation into payment network fees charged by card schemes has brought much-needed attention to the complexity and challenges financial institutions face with these costs. With shifting structures, automatic enrollments, and opt-out deadlines that often slip under the radar, scheme fees have long gone unnoticed due to a lack of visibility in finance departments. Managing them can be tough, but it’s more critical than ever for finance teams to stay on top of these charges to avoid unexpected hits to their budgets.

In light of this, we see a powerful use case for 

: supporting financial institutions in managing and minimising scheme fees by tracking opt-out deadlines and offering clear, up-to-date guidance on when and how to avoid unneeded costs.

The payment networks fee dilemma: automatic enrollments and missed opt-outs

Scheme fees cover a wide range of services from payment networks, from risk management to transaction support. These fees are integral to the payment ecosystem, but how they are introduced can cause headaches. Some payment networks start new services which often come with automatic enrollments and limited-time trial periods, leaving finance teams at banks scrambling to keep track of deadlines. If the bank fails to opt out before a trial period ends, it could result in charges for services it doesn’t need.

These fees can easily slip through the cracks, especially when finance departments overlook scheme bulletins that notify licensees of new services and associated costs. And if a bank relies on its processor for scheme compliance processing, these bulletins might not even make it to the right people. As a result, they might end up paying for a service that they neither use nor that fits their needs.

The impact of overlooked fees on the bottom line

Missed opt-out deadlines and unused services can lead to needless charges; charges that go unnoticed and unchallenged. Over time, these costs add up, eating into profits. For example, some organisations inadvertently pay for advanced fraud detection tools offered by card schemes even though they already have in-house internal systems that cover the same risks. Without visibility into these fees, finance teams may be paying for redundant services that chip away at profitability.

How Kajo helps finance teams at banks, cut hidden costs and regain control

Here’s how Kajo can be an effective tool for finance teams looking to gain visibility and control over these often-overlooked costs:

Tapping into Kajo’s power for finance teams

For finance teams at banks, managing payment scheme fees isn’t just about saving money. It’s about having control and visibility. With Kajo as an organised, centralised solution, finance teams can take a proactive approach and stay ahead by tracking deadlines, making informed decisions and improving the bottom line. 

Kajo equips teams with everything they need to regain control over scheme fee changes and updates, keeping costs in check and ensuring banks pay for products and services they use.

Don’t let hidden fees eat into your revenue. Get in touch with us for a 

The European Commission’s recent investigation into payment network fees charged by card schemes has brought much-needed attention to the complexity and challenges financial institutions face with these costs. With shifting structures, automatic enrollments, and opt-out deadlines that often slip under the radar, scheme fees have long gone unnoticed due to a lack of visibility in finance departments.

Taming the multitude of scheme fees

Taming the multitude of scheme fees: how finance teams can take back control

In the financial sector, particularly within card payment operations, compliance is essential to maintaining operational integrity and customer trust. Adhering to the licensing rules of international payment networks like Mastercard and Visa is crucial, since non-compliance can lead to substantial financial penalties, and, in severe cases, even result in the restriction or loss of licences.

However, the implications extend beyond financial penalties. Non-compliance can disrupt business operations, damage reputations, and deteriorate customer relationships by causing payment delays and transaction issues.

, which serves as a comprehensive guide for scheme compliance managers to ensure compliance is managed efficiently. This checklist is designed to simplify the challenges of compliance through a structured approach, including everything from governance and reporting to effective management of waivers and variances.

In the financial sector, particularly within card payment operations, compliance is essential to maintaining operational integrity and customer trust. Adhering to the licensing rules of international payment networks like Mastercard and Visa is crucial, since non-compliance can lead to substantial financial penalties, and, in severe cases, even result in the restriction or loss of licences.



The ultimate scheme compliance checklist for financial institutions

One of the core aspects of card payments is to comply with license rules (

) of international payment networks (e.g. 

. Such responsibility is usually taken care of by a so-called scheme compliance manager or a team of scheme compliance experts, depending on the bank’s size.

As implied by the term, scheme compliance entails a critical responsibility: to avoid non-compliance leading to interoperability issues, non-compliance assessments, and financial losses due to not optimal interchange or scheme fees. In extreme cases, overlooking compliance requirements can cause fines and lead to a loss of the scheme licence for a bank.

Scheme Compliance Process and Related Problems as of Today

Despite the importance of the process, today’s approach is often inefficient, time-consuming and important requirements are easily overlooked.

There is vast potential to improve this process in the digitalisation age and gain control over the scheme compliance with minimal efforts. At Rivero, we have done this with our product, kajo, and now enable our customers to do it differently.

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6 Improvements for a New Approach to Card Scheme Compliance

Card payment operations is a highly regulated industry, with a core aspect being compliance with license rules (scheme rules and regulations) of international payment networks (e.g. Mastercard, Visa) and the management of scheme fees and interchange rates. 

Compliance is only becoming more complex, and the ever-changing requirements often demand a significant amount of manual work to administer the rule changes – although modern routes are available for accelerating and streamlining some of the processes. 

As payment players race to stay up-to-date with the latest developments, which can be subject to updates on a weekly basis, it’s worth noting the dangers of what can happen when a company violates those rules within the card payment ecosystem. 

First, the most apparent and well-known danger is being faced with financial penalties. At first glance, they may seem bearable in certain scenarios. However, it should be noted that the fees are often structured in such a way that their amount gradually rises with the increasing duration of the non-compliance status and can reach considerable financial dimensions.

Besides financial penalties, in extreme cases - if payment players are unable or unwilling to follow the rules, they also face the risk of having their license scope restricted or even losing their license with the scheme. This is only reserved for the direst of cases where rules are severely and repeatedly violated and the licensee, despite multiple warnings, fails to restore compliance. What is more likely to happen in cases where compliance is not adhered to are operational issues that could damage the company's reputation. 

A fundamental value proposition among some of the newer banking offerings is the promise of frictionless payments. If payment players fail to keep up with compliance requirements and lose their ability to be fully functional, this can have knock-on effects regarding interoperability within the broader payment ecosystem.

This, in turn, can lead to the opposite of seamless customer experiences - with delays, declined payments, and other setbacks that can instantly turn off prospective and existing customers. As well as these external risks around reputational damage, there are risks to internal operations that card payment players need to remember, too. 

What is often forgotten and underestimated is the fact that a non-compliance case resolution often involves writing statements and remediation plans to schemes, and this is a major operational effort. Performing remediation to address requirements that are not in place and providing updated reports can take hundreds of hours of effort and could require bringing on new staff who can focus solely on these efforts. As the scheme has a say in this matter and may impose additional requirements as well as tighter timelines to the remediation plan presented, other projects, initiatives and important activities might have to be postponed or experience delays. 

Lastly, there is potential effort due to Audits by schemes. Like any other Audit, these take an enormous amount of time and energy and are designed to ensure that every single process within a card payment player’s operational framework can be accounted for. 

All in all, instead of facing the dangers listed above, it is much easier to use solutions sooner rather than later that help to automate the process and lighten the operational load on staff.

Card payment operations is a highly regulated industry, with a core aspect being compliance with license rules (scheme rules and regulations) of international payment networks (e.g. Mastercard, Visa) and the management of scheme fees and interchange rates. 


The dangers of breaking compliance rules within the card payment schemes

Maintaining compliance is crucial to any financial institution’s ability to provide services – yet this must be balanced with investing in innovative capabilities that allow for service improvement, market expansion, and customer service improvement. 

This balancing act is particularly challenging in this part of the world: according to 

, the cost of remaining compliant is highest in the UK and Europe, on average three times greater than in North America and APAC and up to seven times higher than in LATAM. 

One aspect of compliance for financial institutions is card scheme compliance, which involves compliance with license rules (scheme rules and regulations) of international payment networks (e.g. Mastercard, Visa). Card scheme compliance includes several facets, such as reviewing the impacts of changing technical requirements on different systems, keeping an overview of new business rules, managing scheme fees and interchange rates, etc. These changing compliance rules are typically communicated weekly to licensees in a “bulletin” format. 

Yet the number of bulletins published by payment networks is becoming more frequent, complex, and hard to stay on top of – for example, Visa and Mastercard alone issued approximately 25 percent more bulletins in the first six months of this year compared to the same period last year. 

This rising volume of rule changes and requirements has added to the workload of teams processing such publications at the banks. As this process is handled manually, the increase in workload can come at the expense of overlooking compliance requirements, missing deadlines or failing to keep an updated overview of the scheme compliance status. 

Scheme compliance entails a critical responsibility: to avoid non-compliance leading to interoperability issues, non-compliance assessments, and financial losses due to non-optimal interchange or scheme fees. In dire cases – overlooking compliance requirements can cause fines and lead to a loss of the scheme licence for a bank.

Although compliance is a crucial process, today’s approach is often inefficient, time-consuming and essential requirements are easily overlooked. 

First, it is a largely manual process. Most scheme compliance managers spend most of their time communicating new rules and requirements to different departments via email and then chasing every individual to collect feedback on the compliance status.

This highly manual process means there’s a high risk of missing some requirements, information or deadlines. In some cases, this might result in discovering unexpected surprises in scheme fees and in other cases, this can cause a compliance oversight, resulting in hefty fines from the payment schemes.

The manual nature of the task also means that preparing a comprehensive compliance overview is a highly challenging task, requiring constant updates and maintenance of the overview. 

Many smaller banks do not have a dedicated scheme compliance manager to take care of the process. Subsequently, it’s either being taken care of by roles such as a product manager or a project manager. The lack of expertise in such a domain increases the risk of non-compliance and related fines even more.

There is vast potential to improve this process in the digitalisation age and gain control over the scheme compliance with minimal effort. Banks need to take the necessary steps to take action – before it’s too late.

Maintaining compliance is crucial to any financial institution’s ability to provide services

Card scheme compliance is becoming harder than ever – here’s why!

Platforms to trade, store and exchange Crypto assets became increasingly popular. But also, in this industry, companies are not immune to discontinuing business activities - as recently happened with the German Crypto Exchange "Nuri" (previously called Bitwala). Very often, the users use a debit or credit card to transfer funds into their account with the platforms. We all know that using a credit or debit card comes with “consumer protection” benefits granted by the licence rules of the card schemes, but how do these dispute rights work in the case of stored assets? Let’s have a closer look.

Are there dispute rights for cardholders if the stored monetary value or digital assets are no longer available?

Yes, if a cardholder used a debit or credit card to “purchase” (load) monetary value at a platform (merchant) and her/his account is subsequently made inaccessible by the platform, the cardholder can initiate a dispute with her/his card issuer. Of course, the amount subject to a dispute must not exceed the total amount of the purchase/load transactions carried out with the card.

What are the preconditions for cardholders to have a dispute right?

The main prerequisite for a dispute right is that the platform fails to deliver the available balance in accordance with the terms and conditions disclosed by the platform and agreed to by the cardholder. This can happen by way of, for example, if the cardholder is locked out of the account, the platform is no longer accessible, the platform does not execute the cardholder’s request for withdrawal of the available balance etc. Before raising the dispute, the cardholder has the obligation to try to resolve the dispute directly with the platform. The communication/contact attempt(s) should be recorded (e.g. print screen of online form, keeping the e-mail sent etc.)

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What are the restrictions for dispute rights?

In a scenario where the cardholder purchased value at the platform / loaded an account (e.g. loads a FIAT account at the platform) and then did a second transaction within the environment of the platform to, e.g. buy cryptocurrency, which is then stored on a separate account at the platform, there is no dispute right on the second transaction/account (e.g. the cryptocurrency value). The dispute right is limited to the funding transaction and the correlating account at the platform. Moreover, the dispute right is always limited to the purchase transaction amounts, so in a scenario where the cardholder buys cryptocurrencies, they increase in value and then the cardholder is no longer able to access the funds, the dispute right is limited to the amount of the transactions charged on the card and not the actual value of the cryptocurrencies. Of course, the dispute right does not safeguard investment risks for the cardholder, so if the purchased value decreases due to market fluctuations, the dispute right is limited to the available balance at the point in time the platform fails to make it available to the cardholder.

What is required to raise a dispute with the card issuer?

The cardholder must provide a detailed description of the purchased value, in case of purchase of cryptocurrencies, e.g. the cryptocurrency type, amount purchased, a record/print screen of the account balance cost, including date and time, the disbursement request, an explanation on how the merchant’s representations do not match the agreed terms and conditions as well as any other relevant information. Card issuers using the dispute tool Amiko may offer the cardholder to initiate the dispute and provide all required information via a digital self-service in the app or portal of the card issuer. Other issuers usually offer a dispute form on their website.

The card issuer can initiate the dispute 120 calendar days from the latest anticipated delivery or performance date (e.g. from the date the cardholder is no longer able to access the funds) but no later than 540 calendar days from the transaction processing date. Given the fact that the card issuer needs time to process the dispute of the cardholder as well, the dispute should be raised by the cardholder with the card issuer as soon as possible.  Some card issuers regulate the timeframe for submitting cardholder disputes in their terms and conditions.

, we help card issuers and acquirers stay informed about changes in dispute and other card scheme rules and enable them to manage the processes and risk exposures accurately.

Platforms to trade, store and exchange Crypto assets became increasingly popular. 

Taming the multitude of scheme fees: how finance teams can take back control

The ultimate scheme compliance checklist for financial institutions

6 Improvements for a New Approach to Card Scheme Compliance

The dangers of breaking compliance rules within the card payment schemes

Card scheme compliance is becoming harder than ever – here’s why!

Crypto Exchange Insolvency - Are Cardholders Protected?