Mastercard replaces its flat European SCA exemption fee with percentage rates of up to 15 basis points

Mastercard's revised Authorization Acquirer Exemption Indicator Fee took effect in the EU and the UK on 12 October 2026. The flat charge of EUR 0.02 per exemption-flagged authorisation is replaced by three ad-valorem tiers: 5 basis points for domestic transactions, 10 basis points intra-regional and 15 basis points inter-regional.

The fee is levied on approved and declined authorisations alike. Domestically and intra-regionally it applies to every strong-authentication exemption except merchant-initiated transactions, recurring payments, Secure Corporate Payment and the Authentication Outage Exception. Inter-regionally it is narrower, covering only low-risk transaction risk analysis, low-value payments and SCA delegation.

Exemption flagging is how a merchant keeps a European checkout frictionless under the strong-authentication rules, and until now it cost two cents whatever the basket was worth. Pricing it as a percentage ties the cost of avoiding a 3-D Secure challenge to order value, so the merchants that leaned hardest on transaction risk analysis and low-value exemptions, high-ticket e-commerce above all, carry most of the increase.

The decision of whether to flag an exemption or send the shopper through authentication stops being a contract-level default and becomes a per-transaction calculation. Because declines are charged too, a merchant with a weak exemption-approval rate pays twice for the same attempt, which turns authentication performance into a direct cost line rather than a conversion metric.

Whether acquirers pass the three tiers through at cost or fold them into blended scheme-fee lines where a merchant cannot see them, whether high-average-order-value merchants retreat from exemption flagging toward full authentication, and whether Visa matches the structure at its next European pricing revision.

• developer.paypal.com