Visa and Mastercard Push Back Interchange Fee Changes

Mar 30, 2020

Visa and Mastercard Push Back Interchange Fee Changes

Visa and MasterCard have announced all credit card interchange fee adjustments for merchants will be pushed back from April to mid-July, due to the COVID-19 pandemic.

While the timeframe has changed for the roll out the fees that will change are remaining the same. We wrote a blog a couple weeks ago detailing the exact adjustments you can read here – Interchange Fee Changes.

Below we have provided a quick summary of the changes along with the winners and loser.

July 2020 – Mastercard

What is changing? The majority of merchants accepting Mastercard will see a fee increase. Mastercard’s Merit I and Merit III programs (very common, almost all merchants see), will be increased.

The only winners for these adjustments will be the Travel & Entertainment and Passenger Transport industry. These verticals should see fees decrease by about 15 basis points.

All other merchants can expect to see Mastercard rates increase by up to 15 basis points, excluding grocery chains. Airlines and general retail will see a 10 basis point increase.

July 2020 – Visa

What is changing? Visa is changing its grocery store interchange fee structure. They are changing the tiers, making it harder to hit higher volume tiers. Fees themselves are decreasing substantially for all large merchant tiers. They will also be adding a new tier zero for large merchants. Smaller grocers should expect to see a small fee benefit as well.

Fees are increasing for Card Not Present and Commercial Card Transactions.

Non-qualified transactions are seeing substantial fee increases. Standard programs and Interchange Reimbursement Fees will now be replaced by a much more expensive non-qualified consumer credit tier. There are also changes to MCC categorizations and additional fee reversals.

Related article – Merchant Category Codes

Different from Mastercard, large grocery chains can expect to see a 15-30 basis point decrease resulting in substantial savings. They are the big winners of these interchange fee changes.

Online merchants, merchants with high volumes of keyed transactions and merchants accepting high commercial card volumes should expect to see a fee increase.

October 2020 – Visa

What is changing? Visa is adjusting the Card Present and the Card Not Present programs. Both programs will see an increase in October. Visa is changing restaurant interchange fees, eliminating the cents per transaction fee component and increasing the % fee component. Retail interchange fees are also being adjusted. There will be reductions from Tier 1 (very large merchants) and increases for smaller merchants.

Large retailers and restaurant chains with small tickets (below $8.88) will see a decrease in interchange fees.

Restaurant chains with average ticket sizes about $8.88 will see an increase along with small retailers.

Tip from Merchant Cost Consulting

When the time comes for these interchange increases, we highly recommend auditing your statement(s) extra careful. A lot of times when the card brands adjust their fees, the processors also feel the need to slip in fee increases as well. Considering the circumstances, they want you to just assume the increase is from the card brands which is not always the case.

By Colin O’Keefe

Prior to founding Merchant Cost Consulting, Colin worked in the payments industry for 3 years gaining an extensive knowledge of the ins and outs of the industry. During that time Colin learned how deceptive the industry can be and wanted to do something about it. Before joining the payments industry in 2014, Colin played professional baseball for the Los Angeles Angels of Anaheim. Colin is from Waterford, CT and received his BA in business from Virginia Tech where he was a member of the varsity baseball team.

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Merchant Cost Consulting is a cost reduction firm that helps businesses lower credit card processing fees on merchant services without disrupting their day-to-day operations.