In the beginning one could only sign up as business owner / … and Curve gave out commercial cards. I believe the idea was to be able to charge a higher interchange fee (because of the commercial card) and charge a lower card fee (0.2% (debit) / 0.3% (credit)) to the underlying consumer cards.
That changed when Curve started issueing consumer cards. Even worse then, having a Curve consumer card and the underlying card being a commercial card, Curve would actually lose around 1% for each transaction. Financial-wise Curve could add a underlying commercial card fee since they really do lose a lot of money there.
Now we don’t know what Curve has to pay for charging an underlying card, but just to give you an idea. Stripe charges 1.4% for all cards and only offer a disagio price, same as Worldline / SixPayment, Mollie,…
Other accquireres, like Adyen (really expensive), Wirecard (RIP), Concardis, First Data, … have an interchange++ payment model.
Interchange fee (what the accquirer has to pay to the card issuer) - variable
- all consumer EU cards are 0.2% for debit and 0.3% for credit (because of the GOOD EU law)
- commercial cards much higher
- the profit the accquirer makes, wide range from 0.20% to 1%
Card scheme fees
The card scheme fee is very tricky and not well known.
Visa usually charges 0.04% and Mastercard 0.42%, so yes, thats a BIG difference of 0.38% as a merchant whether your customer pays with Visa or MC.
So the card scheme fee with MC is actually higher than the capped interchange fee, I have no idea why this was not adressed in the EU legislation.
Unless Curve can become an accquirer itself, they will always lose money with every transcation since they can only charge the interchange fee but have to pay the interchange fee + card scheme fee + accquirer fee. Even if they were an accquirer, they’d still have to pay the card interchange+scheme fees but only receive the interchange fee.
Don’t ask me how this can be financially sustainable, but I don’t think any fintech actually makes money. I remember reading N26 has lost ‘only’ 200 mio € last year.