5
Payments Regulation in Asia
Competition within the card market, competition with the card market, and regulation protecting market competition and efficiencies are essential to a functioning payments system, and this report examines how these areas have applied to the countries in scope.
Payments Fees Definitions
For each card transaction, the merchant must typically pay three members of the supply chain:
A network fee, or scheme fee, is typically set and received by the network operator for that given transaction.
A processor fee, or acquirer fee , is typically set and received by the merchant’s bank or acquiring bank, the party that helps facilitate the acceptance of card transactions.
An interchange fee , typically the largest of the three, is typically set by the network operator for that given transaction and received by the consumer’s issuing bank. Interchange functions as an incentive for issuers to ‘badge’ a given network on a card. For example, if an issuer is launching a new credit card and requires a network operator for that card, and Network A prices interchange higher for a given card than Network B, then the issuer would receive a higher fee per transaction if badging Network A.
The sum of these three fees is what’s commonly referred to as the Merchant Discount Rate (MDR) or the Merchant Service Charge (MSC).
Payment Method Definitions 2 Account to Account: Electronic payments made directly from one party to another while bypassing card network rails. A2A payments are embedded in apps and online services such as Pix in Brazil, iDEAL in The Netherlands and BLIK in Poland. Buy Now, Pay Later: BNPL service providers settle a payment with the merchant at the time of purchase while allowing consumers to pay for goods and services at a later date, typically in a finite set of installments and without interest if repaid within the agreed time. Cash and Cash on Delivery: Cash is limited to physical cash or checks and excludes central bank digital currencies (CBDCs). Cash on Delivery is defined as goods ordered online and paid for with cash at the time of delivery. Credit Card: Credit cards are issued by financial institutions affiliated with a global card brand network. Credit cards allow consumers to make purchases via an extension of credit from a financial institution.
2 Given the basis of the payment method analysis is primarily based on 2017-2023 WorldPay Reports on Global Payments, all definitions can be sourced from the 2023 report unless otherwise specified.
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