Karsten Wenzlaff, Advisor
August 26th, 2025
Karsten Wenzlaff is a Crowdfunding and Fintech Expert from Germany. He is Secretary-General of Digit[...]
Category Archives: Payments, Transfers, Rewards
What Are Interchange Fees and How are they Charged?
Jul 27, 2023
Businesses of all sizes will often end up paying a lot more in subtle fees and charges than most realize. Interchange fees happen to be some of the most prolific among them. A proper understanding of what an interchange fee is, what are the other fees associated with it, and how they are all charged by the merchant should be considered critical knowledge for all business owners. Let’s get started with an introduction to exactly what an interchange fee is.
Interchange Fee
An interchange fee is imposed on a merchant each time a customer pays using their credit or debit card. They are applicable to both online and offline transactions. This fee is charged by the merchant services provider who is responsible for processing credit/debit card transactions for the concerned business. However, the merchant services provider does not get to keep the money they collect as interchange fees.
See: Biden Proposes Cap on U.S. Credit Card Fees to Save Consumers $9 Billion
The amount is instead transferred to the credit card company or bank that issued the credit/debit card which was used for the transaction. The purpose of the interchange fee imposed is that of insuring or covering the credit card company or bank against potential risks of loss from bad debts, fraudulent transactions, and the like.
Interchange Rates
The interchange fee will always be equal to a percentage of the concerned credit/debit card transaction. The dynamic rate which determines what percentage of the transaction will be charged as the interchange fee is called the interchange rate. Debit/credit card networks such as Visa, MasterCard, American Express, Discover, etc., are the ones who both set and change the interchange rates. Any changes they make can be quite frequent, but generally limited to twice a year at most.
Interchange rates will vary widely depending on the merchant services provider, the credit/debit card network, the bank, the specific card, the transaction amount, and more. However, credit card transactions are generally charged at a higher interchange rate than debit card transactions. Online payments made via debit/credit cards are charged at higher interchange rates than point-of-sale (POS) transactions because Card Not Present (CNP) is deemed a higher risk factor than POS.
Transaction Fees
The total amount which is deducted from each credit or debit card transaction by a merchant service provider before it’s deposited in their merchant account is known as the transaction fee. In other words:
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Interchange Fee + Payment Processing Fee = Total Transaction Fees
It can get very expensive for a business if they are not careful in managing their transaction fees. As Interchange Plus pricing allows merchants to pay their interchanges fees at the lowest rate possible per transaction, it’s an assured step towards cutting down on total transaction fees. Combined with Interchange Plus’s low payment processing rates, the amount of money saved per year can be quite staggering for merchants who process a high volume of card payments.
Finally, we must take a look at the assessment fees as well, even though they’re not charged on every transaction. Assessment fees are charges levied on merchant accounts by credit card networks in return for allowing the merchant to accept payments made via a debit/credit card managed by them. The assessment fee is charged on the basis of how many times the network’s cards are used to make payments by customers per month.
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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Amazon’s Biometric ‘Pay-by-Palm’ Technology (Amazon One) is Rolling Out to All Whole Foods Stores by End of Year
News | Jul 24, 2023
Image: Amazon One, website
Amazon continues to redefine the retail landscape, announcing plans to implement its groundbreaking 'Pay-by-Palm' technology across all Whole Foods stores by the end of 2023.
This revolutionary biometric payment solution, as reported by CNBC, is set to transform shopping experiences, reinforcing Amazon's technological leadership in the retail sector.
See: Amazon’s Jeff Bezos hired this applicant ‘on the spot’—here are the 2 interview questions asked
Contactless Biometric Payments
The 'Pay-by-Palm' technology, dubbed Amazon One, eliminates the need for cards, cash, or even a smartphone. Instead, customers can finalize their purchases with a simple wave of their palm. This technology highlights Amazon's continuous dedication to innovation and customer-centric solutions, which have been a cornerstone of its business model.
Amazon One's contactless payment method offers a multitude of benefits, especially relevant in the current climate. In the wake of the pandemic, consumer preferences have significantly shifted towards touch-free transactions, emphasizing health and safety. Amazon's 'Pay-by-Palm' technology not only meets this demand but also enhances transaction speed, thus reducing waiting times and promoting a more efficient shopping experience.
Rolling Out Across All Whole Food Stores
Image: Unsplash/Brittani Burns
The planned rollout of Amazon One across all Whole Foods stores follows a successful pilot program in select locations in Seattle. These test runs have demonstrated the system's reliability and ease of use, making a compelling case for a broader implementation. Once fully operational, the 'Pay-by-Palm' technology could pave the way for more widespread adoption of biometric payment solutions in the retail sector. This move positions Amazon as a leading figure in the evolving retail technology landscape, setting new standards in customer experience and transaction efficiency.
See: FedNow Real-Time Payment Service Launches: A Game Changer in the U.S. Financial System
However, the introduction of such advanced technology also raises critical questions around data security and privacy. Amazon has reassured customers that it has implemented robust data security measures, and personal information will be handled with the utmost care. This includes encrypting biometric data and storing it securely in the cloud.
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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FedNow Real-Time Payment Service Launches: A Game Changer in the U.S. Financial System
News | Jul 21, 2023
Image: Freepik/travelscape
The Federal Reserve, the nation's central banking system, has recently launched its first real-time payment service, FedNow.
What is FedNow and how does it work?
- FedNow officially launched on July 20, 2023, with only a small portion of banks among the early adopters of the service. The Federal Reserve is working to onboard additional institutions throughout the year and beyond, aiming to reach all 10,000 U.S. financial institutions.
- FedNow is not a consumer-facing app like Venmo, PayPal, or Zelle. Instead, it is a payment infrastructure that allows banks to move money instantly. More than 50 financial institutions are early adopters of FedNow, including popular banks like JPMorgan Chase, Wells Fargo, and Peoples Bank.
See: Could FedNow Outperform Virtually All Existing Cryptocurrency Projects?
- FedNow is a service and suite of tools available to banks, credit unions, and other financial service companies. It allows the customers of the institutions that choose to implement FedNow to instantly access their money to make payments in a variety of situations.
- The Federal Reserve will also offer an additional suite of tools to the banks to allow them to prevent fraud and better manage their cash flow.
- This innovative service is set to make money transfers and bill payments almost instantaneous, even on weekends and holidays. The service was launched with numerous banks and financial institutions as partners, with many more expected to join in the coming months and years.
What are the anticipated benefits?
- The benefits of FedNow are expected to be significant for everyday people. For instance, you could pay your mortgage bill on Christmas Day without worrying about it being delayed or late because of the holiday.
- Transferring money between different banks could be done instantly. Gig workers like Uber drivers could get paid immediately after each completed ride.
- The entire U.S. financial system stands to gain from a universal instant-payment service like FedNow. Under such a system, consumers, businesses, and the government would be able to send and receive money instantly. More than 50 countries already have similar systems, including China, Sweden, India, and the U.K.
What are the implications?
- Some experts worry that a widely used instant-payment system could increase fraud. More processing time, the argument goes, means more time to allow verification and security measures to stop bad actors.
See: Interac and many of Canada’s leading financial institutions enhance Interac e-Transfer to introduce instant digital payments for businesses
- Similarly, some argue that being able to move large sums of money out of bank accounts immediately could introduce instability in the banking system.
- The Fed says the service is intended to generate competition for additional providers to create end-user services — such as additional payment apps.
- Now that banks have the capabilities to essentially build their own versions of PayPal or Venmo within their own banking app, it's possible that the dominant cash-sending companies will look much different in the years to come.
Will the new FedNow service have a significant impact on your payment workflow?
- In conclusion, FedNow is a revolutionary step towards instant payments, promising to make managing money much easier and faster for everyday people. As more financial institutions adopt this service, the benefits to individuals and businesses will be significant, enabling immediate receipt of paychecks and instant access to funds when an invoice is paid.
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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China’s CBDC: Offline Digital Yuan Payments via Super SIM Cards
News | July 12, 2023
Image: Unsplash/Rodion Kutsaiev
The Bank of China is collaborating with China Telecom and China Unicom to integrate its digital yuan app with specialized "super SIM cards" that have near-field communication capabilities.
The Bank of China is pioneering an offline payment system for the digital yuan, China's central bank digital currency (CBDC), using specialized "super SIM cards". This innovative approach, being tested in partnership with China Telecom and China Unicom, allows transactions to be processed even when the phone is powered off, expanding the use and accessibility of the digital yuan.
See: Beijing’s Digital Ambitions: A Deep Dive into the Web3 Innovation and Development White Paper
- The Bank of China is working with telecommunication operators China Telecom and China Unicom to test this novel offline payment system.
- The system utilizes "super SIM cards" with near-field communication capabilities, allowing transactions to be processed even when the phone is off.
- The offline payment system is part of China's broader initiative to expand the use cases for its CBDC, which includes plans to extend digital yuan usage for tax and utility payments.
- The digital yuan is already being used for public bus rides on 10 transit routes in the Chinese city of Guanzhou.
- Hong Kong is also exploring the possibility of cross-border payments linking the digital yuan and the e-HKD, its potential retail CBDC.
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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APIs and the Evolution of Digital Platforms: Towards a Three-Sided Market
Citi | Jun 16, 2023
Image: Citi
Embracing the three-sided market model, where financial institutions integrate with digital platforms alongside buyers and sellers, can unlock new network effects, accelerate economic growth, and enhance customer engagement in the digital economy.
- The report introduces the concept of a "three-sided market" where financial institutions are integrated into digital platforms alongside buyers and sellers. This model enhances the platform's value proposition by providing financial services such as payments, foreign exchange, and credit within the platform itself.
- Integration of Financial Services into Platforms:
- The report discusses various ways platforms have integrated financial services, including partnering with established financial institutions, creating regulated subsidiaries, or leaving the provision of financial services to external third parties.
- The report identifies Open Banking, Embedded Finance, and Decentralized Finance (DeFi) as potential catalysts for the emergence of three-sided marketplaces.
- Opportunities for Fintechs:
- They could also collaborate with platforms to create unique value propositions, such as exclusive discounts or rewards, to drive customer engagement and loyalty.
- They could also develop solutions that help platforms integrate financial services more efficiently and could play a key role in facilitating the transition.
See: FIS Dives Deeper into Embedded Finance with Bond Acquisition
- Opportunities for Banks:
- Banks could see this as an opportunity to maintain customer engagement and expand their services in the digital economy. By becoming integral components of these platforms, banks could tap into new customer bases and participate more actively in the digital economy.
- Banks could explore partnerships with platforms or consider developing their own platforms. They could also consider how to leverage their existing customer relationships and trust to provide services within these platforms.
- Implication for Regulators:
- Regulators need to consider the implications of this new business model, particularly in terms of ensuring fair competition, data privacy, and security. They may need to update regulations to accommodate these new business dynamics and ensure consumer protection.
View more --> here
Download the 20 page PDF report --> here
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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Marqeta 2023 State of Payments Report: Rise of P2P Payment and Embedded Financial Services, & Hybrid Future?
Tearsheet | Sara Khairi | Jul 5, 2023
Image: Marqueta - 2023 State of Payments Report
The future of banking is expected to be a hybrid model, combining traditional and embedded financial services (Marqeta: 2023 state of payments report)
- Traditional vs Digital Banks -- Hybrid future?
- Despite the rise of digital banking, traditional banks continue to play a significant role. Consumers are seeking the best of both worlds, with 37% wanting to maintain relationships with their traditional banks while also enjoying the benefits of tech-enabled services from digital banks.
- 81% of consumers using a traditional bank for their primary account and 64% storing the majority of their funds in a traditional bank.
- However, 37% of consumers also use a digital-only bank, primarily due to satisfaction with their mobile apps.
- Traditional payment methods, such as cash and debit cards, still surpass newer digital payment methods, but the gap is narrowing.
See: Payments Canada Report: Rebound & Grow – Payment Methods and Trends in 2021
- Rise of Embedded Financial Services:
- Embedded financial services, such as integrated payments and Buy Now, Pay Later (BNPL) options, are gaining popularity due to their convenience. These services are expanding beyond payments and lending to include insurance and investments.
- Integrated payments, in particular, are leading the way, with 76% of consumers preferring to make purchases through a retailer's mobile app, up from 69% in 2022.
- P2P Apps Gaining Traction - expected to reach $4.89 trillion by 2030
- Younger Americans are driving this growth, with 75% of consumers having used a P2P payment app in the last 12 months.
- PayPal is the most popular service, with 88% of consumers reporting usage in the past twelve months.
Read: Payments Canada Delays Launch of Real-Time Rails Again (without a timeline)
- Shift in Card Business:
- The increased adoption of digital wallets is creating competition among card issuers. Consumers tend to keep only a few cards in their digital wallets for ease of use and convenience. Card providers can stay ahead by offering a hassle-free experience, flexible payment terms, and relevant rewards and incentives.
View more --> here
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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From Gaming to Gig Economy: How Canadians are Embracing New Payment Methods
CPPO | Jun 30, 2023
Image: CPPO
The popularity and satisfaction of prepaid methods have skyrocketed as Canadians increasingly adopt digital payment systems.
This trend is evident in a variety of new applications, such as 'Buy Now, Pay Later' (BNPL) schemes, immediate wage access for gig and contract workers, third-party delivery services, digital-centric accounts for transactions and savings, as well as digital wallets used for gaming and sports betting.
- Digital Payment Adoption Among Younger Canadians and BIPOC Communities:
- The research indicates a significant shift among younger and middle-aged Canadians (under 55), and those who identify as BIPOC, towards non-traditional, digital financial services indicating a growing market for digital banking and payment solutions.
- The report reveals that 60% of consumers are worried about using their credit card online, and many are turning to prepaid cards for online purchases because they believe it is more secure. This indicates a significant opportunity for businesses to offer prepaid options and emphasize security features to attract and retain customers.
See: Signals by Mastercard: Trends to Watch in the Future of Payments
- The Gig Economy and Immediate Payment:
- The gig economy has seen significant growth in Canada, particularly among younger demographics. These workers prefer immediate payment after completing tasks or shifts, suggesting a need for businesses to consider flexible and immediate payment options.
In conclusion, the digital transformation of the Canadian consumer payments landscape is reshaping how businesses should approach their payment methods. By understanding these trends and adapting accordingly, businesses can better meet the needs of their customers and stay ahead in the competitive market.
View the 10 page PDF report --> here
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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