Mastercard & Visa To Delay Merchant Fee Increase to 2023
Exciting news for retail and e-commerce merchants accepting Visa and Mastercard: The two credit card networks are postponing their planned merchant fee increase until 2022 due to the pandemic.
Visa said in a recent statement, “Visa is committed to maintaining stability in our payments system and will not make any future rate changes in the U.S. for another year while the economy recovers.”
Mastercard made a similar statement: “Mindful that some merchants are still facing unprecedented circumstances, we are delaying our previously announced interchange adjustments.” Their delays will also include brick-and-mortar retailers, as well as convenience stores and supermarkets.
This is especially great news for e-commerce merchants who have requested that the two companies hold off increases in their interchange fees since consumers have expanded their online shopping during the pandemic.
According to a story in Bloomberg, Senator Dick Durbin (D-IL) asked for further assistance. He and U.S. Representative Peter Welch (D-VT) wrote a letter asking them to delay the merchant fee increase.
“Our nation is still reeling from the ongoing pandemic,” they said in the letter.
The fees were expected to add a net of $889 million to merchants’ costs, said a study by CMSPi, a U.K.-based retail payments consultancy. The total benefit to both companies will be $1.15 billion.
The biggest portion of the increase will be accounted for by Visa, whose new interchange structure will result in an estimated $768 million in new fee income, CMSPi’s estimate says. Hardest hit will be full-service restaurants and subscriptions, along with online merchants. Large retailers will see a lesser increase, while small-ticket merchants and quick-service restaurants will see either no impact or potentially some reductions, based on their ticket values.
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For Mastercard, the net increase from its rate changes will total to an estimated $383 million, with both online and in-store transactions absorbing the toll. This includes a wide swath of sellers, including grocers, airlines, and convenience stores. Passenger transport and travel-and-entertainment outside of airlines will see at least some net benefit, however, CMSPi estimates.
What does postponing the merchant fee increase mean for merchants?
The Merchants Payments Coalition — the trade group for retailers, supermarkets, convenience stores, and gas stations, as well as e-commerce merchants — said in a statement: “Visa and Mastercard did the right thing in delaying this dramatic and unwarranted increase. An increase would have been a serious blow for merchants still trying to recover from the pandemic. But the fact remains that credit card swipe fees paid by U.S. merchants are among the highest in the world.”
Merchants are already facing a major battle in trying to deal with increasing fraud and chargebacks, so news like this is a welcome respite from the losses they’re already facing. We appreciate that the two major credit card networks have recognized that merchants need a little good news.
This also means you have another year to prepare for a future merchant fee increase. If you need to adjust your pricing or modify your own practices to ensure profitability, now is the time to do it. If you’re unsure how to manage these pending increases, Corepay can help.
Corepay can reduce fees, improve security, and cut back on needless chargebacks. To learn more just visit our website or call us at (866) 987-1969.
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