SRM estimates the acquiring sector may be under-recovering $3 to $5.5 billion in scheme fees over five years, roughly $700 million a year.

In SRM’s recent webinar, Enabling Merchant Acquirer Profitability: Turning Payments Complexity into Actionable Intelligence, Ian Povey, a member of SRM’s international advisory board, moderated a discussion between speaker John Berns (Managing Director of SRM Europe) and Kirill Lisitsyn (CEO & Co-Founder of Torus) on how acquirers can regain control of their economics through better data and clearer management. The discussion reinforced a simple point: Acquirers cannot manage profitability without visibility, and that visibility begins at the transaction level. For additional research and context behind the webinar, read SRM’s Perspectives Report on merchant acquirer profitability, here.

Below are key insights from the conversation.

1. Thin Margins Leave No Room for Lost Revenue

Acquirers manage many moving parts: multiple sales channels, payment gateways, chargeback risk, and the operations and expertise to support them.

Large enterprise merchants regularly question their fees and request more details on monthly statements. Many also hold contractual audit rights, and responding to an audit requires significant time and staff.

Meanwhile, market consolidation is making scale essential. Payment service providers transitioning into acquirers cannot postpone building their data capabilities; they need accurate data from the start.

2. Scheme Fees Are the Hardest Cost to See

Interchange and scheme fees are the two largest costs acquirers pass on to merchants. Because card networks publish interchange rates, most acquirers manage them effectively. Scheme fees are more challenging: there are hundreds, and they continue to grow in number and complexity while acquirer billing systems struggle to keep pace.

The numbers illustrate why this matters. Acquirer margins average roughly 21 to 25 basis points (0.21% to 0.25% of transaction value), while scheme fees for a typical enterprise portfolio total roughly 11 to 13 basis points. When costs of this size cannot be traced clearly, even minor errors can have a large effect on profit.

3. Settlement Gaps Reduce Margins and Merchant Trust

Most acquirers aim to deduct interchange and scheme fees from daily merchant payouts. Under Interchange pricing, merchants pay these fees at cost plus the acquirer’s margin. However, the amounts deducted often do not match the card networks’ month-end invoices, causing acquirers to collect less than they owe.

Finance teams are left asking a simple question: Why do the deducted fees differ from the network’s invoice?

Closing the gap requires an adjustment invoice, which often prompts merchants to question the charge. Acquirers may struggle to explain it, and the cycle repeats. The result is lower margins, diminished merchant trust, and analysts focused on reconciliation rather than operations.

4. Accurate Costs Start with Each Transaction

Card network invoices group charges by billing line as a fee category rather than by merchant. To see true costs for each merchant, acquirers need to recalculate fees on a transaction-by-transaction basis, assign them to the correct merchant, and reconcile the total back to the invoice. Estimates based on summary data can introduce errors that are hard to trace.

Once costs are accurate for each transaction, acquirers can analyze profitability by merchant, card type, transaction type, geography, and sector.

However, handling data at this volume raises practical questions for acquirers about infrastructure costs, data security, and data storage. It requires anonymizing card data, meeting PCI DSS requirements, and complying with local data-residency rules.

5. Cost Accuracy Supports Better Commercial Decisions

Accurate merchant-level cost data does more than recover fees. It shows which merchants are profitable and which are not, guiding pricing for new and existing merchants. It also helps acquirers deliberately decide when to accept a lower margin to pursue a larger strategic goal, such as entering a new market and it allows sales teams to price new business within set margins without waiting for a pricing committee.

More data alone doesn’t lead to better decisions. The value comes from pairing accurate data with clear analysis and a repeatable process for acting on it.

The Executive Mandate: Manage Profitability Before Month-End, Not After

Many acquirers manage profitability by reviewing month-end reports, issuing adjustments, and reconciling manually after the fact.

The first step is simple: compare the interchange and scheme fees recovered from merchants against the card network invoice. If the amount recovered is less than the amount invoiced, identify the source of the gap before the next billing cycle. As a working assumption from the webinar, treat roughly 3% of scheme fees as unverified until your own reconciliation proves otherwise.

SRM works with acquirers to turn complex payments data into clear, usable management information, from transaction-level cost recovery to merchant-level pricing decisions. Through its partnership with Torus, SRM pairs that advisory work with a platform built to reconcile scheme fees at scale.

Reach out to SRM for more information about what profitability insights and actionable intelligence could do for your institution.

Timestamps and Key Topics 

00:00 Welcome and speaker introductions

03:03 Setting the scene: the changing economics of merchant acquiring

04:08 The challenges acquirers face: complexity, thin margins, and enterprise merchant demands

07:04 Why consolidation has made scale essential

07:48 Payment service providers, alternative payment methods, and the need for a single merchant view

09:40 The two largest costs: interchange and scheme fees

13:20 Scheme fee settlement timing and working capital

14:41 Net settlement and the gap between fees collected and fees invoiced

17:46 Transparency, regulatory attention, and rising scheme fee complexity

21:26 From visibility to profitability: why the focus starts with scheme fees

24:47 Using management information for growth and merchant-level profitability

30:15 How transaction-level reconciliation reaches 100% accuracy

33:50 Why the problem is growing: acquirer margins and scheme fee costs

38:00 Why transaction-level visibility is becoming essential

39:19 Understanding the $3–5.5 billion under-recovery estimate

42:47 Data processing, security, and deployment choices

48:20 Q&A: Where to start when revenue loss is suspected

53:38 Q&A: Using merchant-level data for pricing, segmentation, and growth