Spotlight: Understanding domestic card schemes

When we hear the phrase ‘card networks,’ most think of Visa and Mastercard. However, that’s not the case in every part of the world.

In Denmark, Dankort is the most recognized card network. In Saudi Arabia, it’s mada, while in France, Cartes Bancaires is omnipresent.

The point is that in many parts of the world, Visa, Mastercard, and American Express aren’t the only game in town. In fact, there are more than 90 domestic card schemes around the world, accounting for billions of transactions.

In this article, we’ll shine a spotlight on these domestic card schemes, discussing:

• The different domestic card schemes that exist
• Why domestic card schemes are becoming more common
• When does it make sense for merchants to accept cards running on domestic card rails?
• How regulation is impacting the card ecosystem and how merchants can respond.

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But first, let’s remind ourselves of what a card network is and its role in the payment ecosystem.

What are card networks, and why do we need them?

The card networks, otherwise known as card schemes and card brands, are the connective tissue facilitating card payments. They do so by connecting a Merchant Acquirer with an Issuing Bank, allowing for the fast and efficient data exchange that enables payment processing in the blink of an eye.

As well as acting as the pipes, the card networks also set the rules. These include the frameworks for communication—the ISO8583 protocol—security standards, authorization and settlement procedures, and dispute resolution, to name a few.

While Visa, Mastercard, and UnionPay dominate global card volume, domestic schemes have the lion’s share in some markets. Let’s look at these in the next section.

A quick look at popular domestic card schemes

Here are some of the largest and most established domestic card schemes.

• Cartes Bancaires: France’s local card network processes 60% of the country’s card transactions. Almost all its credit and debit cards are co-branded Visa or MasterCard.
• Dankort: Introduced in 1983, Dankort has become integral to card payments in Denmark. The Danish government oversees the Dankort network, regulating the network so it provides low transaction fees. As is the case for most local card schemes, this makes it cheaper for merchants to accept payments and consequently lowers consumer prices.
• Eftpos: Australia's local debit card scheme, eftpos was introduced in 1984. Today, it offers contactless cards and mobile payments. It has 49 million cards in circulation and provides the least cost routing online and via POS.  
• RuPay: Launched by the Reserve Bank of India (RBI) in 2012, RuPay is part of a National Payment Corporation of India (NPCI) initiative to boost retail payments and help move India towards a more cashless economy. Over 700 million RuPay cards have been issued, and the brand now dominates the local debit card market.
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These card schemes all facilitate both online and offline transactions. There is also a whole cohort of domestic card schemes that are only used for bank withdrawals or in-store payments. These include. BankAxept in Norway, Multibanco in Portugal and Girocard in Germany.

Although providing competitive, in-country alternatives to international card schemes, domestic card schemes are still typically co-badged with Visa and Mastercard.

Domestic card schemes are expected to account for 7.5% of card volume worldwide by the end of 2027.

Why do local card networks exist?

There are many reasons why countries launch or promote their existing domestic card scheme. Typically, it’s a combination of the following factors.

• Reduced dependence on international brands: Lawmakers in some countries are concerned about the over-reliance on US-based (and now Chinese-based) international card schemes and have built a domestic card network to offer redundancy.
• Promoting competition: Domestic card schemes can drive fresh investment, innovation, and value within the payment chain.  
• Lower transaction costs: Most, if not all, domestic card schemes are regulated and thus provide lower transaction fees, making it cheaper for merchants to accept payments and consequently lowering prices for consumers.
• National economic policies: Domestic schemes can be used to support government initiatives to encourage better inclusion for small businesses and consumers, boost the cashless economy, and prevent tax evasion.    
• Regulatory Control: Operating a domestic card scheme allows governments to defend national interests, ensure data security, and maintain control of payment systems within their own country’s jurisdictions.

Could more domestic card schemes be on the way? Payments have become a hot-button political topic in recent years. This political spotlight is leading several markets to launch or consider a domestic card scheme. These include Indonesia, which launched its new domestic card network last year, and the UAE, which has announced it will launch a 24/7 instant payments system and domestic card scheme.

Should merchants accept payment from domestic schemes?

While the final decision on whether to accept domestic card scheme payments will depend on your location, customer base, and business goals, there are some other factors to consider:  

• Market Reach: Cross-border retailers can boost appeal by localizing their payment pages with popular domestic debit and credit card options. When entering a new market, it pays to conduct research to establish popularity before committing.
• Reduced Transaction Fees: Typically, domestic schemes incur lower fees, this can help both small merchants and high-volume retailers to reduce costs, lift revenue, and keep customer pricing competitive. But make sure to include any set-up costs when comparing ROI.
• Regulatory Compliance: Some countries, like China, require merchants to accept domestic card networks for payment processing.
• Supporting Local Economy: Unlike international card schemes, where most fees go outside the country, resulting in a loss of valuable foreign exchange, domestic card schemes benefit local economies.
• Competitive Advantage: A local option alongside international card schemes can help brands compete in markets and user segments where domestic schemes dominate.  But make sure they’re easy to integrate and won’t introduce unnecessary friction to your checkouts.

How regulation is shaping Europe’s card ecosystem and merchant offerings

In Europe, the EU Regulation 751, also known as the Interchange Fee Regulation (IFR), aims to drive competition in the European card payments landscape.

Setting out rules for the fees charged by payment card schemes also covers transparency, freedom of choice, surcharge restrictions, and improved security for online transactions via strong customer authentication (SCA).

It also outlines your rights and obligations when accepting card payments from customers within the European Union (EU). This includes Article 8, which relates to co-badging and choice, and Article 10, often called the ‘Honour all Cards’ rule.

These rules have been in place since 2016, but they matter more now due to the growing risk of possible fines for merchants needing to comply.

Read our blog to learn more about how Primer empowers merchants to comply seamlessly with EU Regulation 751 while offering customers a seamless experience.

The future of card networks

International card schemes have been instrumental in the global growth of digital payments and the subsequent rise of ecommerce. However, the increased complexity of the payment landscape, legislation changes, and a growing concern for data security have created a strong desire for domestic payment ecosystems that are more inclusive and tailored to local economics, language, and cultural preferences.

This trend will continue as more nations invest in retail infrastructure to boost local economies and move citizens from cash to digital payments.

As new payment options emerge, merchants must stay up to date to provide customers with the right payment mix. Balancing choice, compliance, and competition can be challenging.

That's where a payments partner like Primer comes in. We can support all existing and emerging card schemes, helping you navigate every option and achieve the best acceptance routes and rates for all your markets.

Download our guide to global payment methods and discover how to leverage payments to grow your business.