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Visa to Modify Interchange Fees

[Thursday, March 5th, 2020]

Recently, it became known that Visa‘s intended to make significant changes to card interchange fees, also called swipe fees, which are to become the biggest modification in this field for the last 10 years. Interchange fees are paid by merchants to the card issuer for processing credit card and debit card transactions when customers prefer such payment methods to cash.

Both Visa and Mastercard have already increased the mentioned fees for merchants that accept electronic payments last April. It is no secret that the fees bring the card payment networks a huge share of their income. However, this time things are a little different.

The interchange rates will either rise or fall depending on the merchant and the way a consumer pays for purchases. At the moment, it is expected that higher rates will be introduced on purchases carried out through online stores, while particular service categories, such as education and real estate, on the contrary, should bring retailers lower fees.

As for swipe fees on card-not-present transactions, that include payments for purchases made online or over the phone, they are supposed to increase. The size of the leap will depend on the card status. For example, ordinary Visa cards will have the fee per a $100 transaction raised from $1.90 to $1.99. At the same time, premium Visa cards, which now imply a fee of $2.50, will later bring $2.60.

According to a Visa official document, the credit card network is “adjusting its default U.S. interchange rate structure to optimize acceptance and usage and reflect the current value of Visa products.” It also says that “the U.S. credit interchange structure has been largely unchanged for the past 10 years.”

Though it may seem that the changes are rather insignificant – just some cents per transaction, in general, they turn out to be appreciable for sellers with a large number of customers and great revenues. Nevertheless, the merchants taking credit and debit cards for in-store and online payments typically boast much more sales.

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