Visa and Mastercard are delaying planned raises to interchange fees due to the coronavirus pandemic. Both payment giants will now keep merchant fees at their current level until 2022. Here is what you need to know about Visa and Mastercard’s announcement of delays to interchange fee hikes – and what these fees are.
Mastercard and Visa Maintaining Current Merchant Fee Rates Through April 2022
The coronavirus pandemic is forcing more and more consumers to conduct their shopping online. Online shopping provides a wealth of benefits to consumers but can cause headaches for merchants. The biggest issue with online shopping is that merchants must pay interchange fees for purchases made with credit cards.
Both Visa and Mastercard – by far the two largest payment networks – are now bowing to pressure by delaying their plans to hike merchant fees until at least April 2022. According to Bloomberg, the original plans called for a rise to $1.99 from $1.90 on a $100 transaction via Visa Traditional cards and up to $2.60 from $2.59 for Visa Signature and Infinite cards.
These proposed fee changes were deemed excessive by some politicians, with another feeling they could cause thousands of brick-and-mortar businesses to close permanently.
The changes were initially expected to roll out in April 2020, but the pandemic forced both Mastercard and Visa to push that date back a year. Now, with the COVID-19 pandemic still raging and millions of Americans waiting on a third coronavirus stimulus payment, the two credit card payment companies are again walking back their fee change date.
“Keeping American Businesses Open”
Both Visa and Mastercard issued statements discussing their decision to postpone their interchange fee rate increases until 2022.
In a statement, Visa stated that “Visa is proud of the role we have played in helping keep American businesses open during this extraordinary time. We believe the steps we have taken and are taking today will further support the recovery.”
Mastercard also released a brief statement, saying that “Mastercard continues to support our merchant partners by enabling them to keep their businesses open with safe, secure and reliable payments for both in-store and online purchases.”
What Are Interchange Fees?
Interchange fees are the charges a merchant must pay when a customer uses a credit or debit card to make a purchase. These charges cover the costs associated with credit and debit card payments, including purchase handling costs, bank fees, fraud protection costs, and more.
Visa and Mastercard are not unique in charging these fees. American Express also charges a merchant fee, which used to be higher than those of Visa or Mastercard. However, through the OptBlue program, Amex is increasing its presence, with over 99% of U.S. merchants now accepting the payment network.
Related Article: Restaurant Industry Calls for Cuts to Swipe Fees in Face of COVID-19
Featured photo by Matthew Henry / Burst
Editorial Disclosure – The opinions expressed on BestCards.com's reviews, articles, and all other content on or relating to the website are solely those of the content’s author(s). These opinions do not reflect those of any card issuer or financial institution, and editorial content on our site has not been reviewed or approved by these entities unless noted otherwise. Further, BestCards.com lists credit card offers that are frequently updated with information believed to be accurate to the best of our team's knowledge. However, please review the information provided directly by the credit card issuer or related financial institution for full details.