Wednesday, April 20, 2011

2011 Interchange Rates Rise (Again)

Merchants have been complaining about Interchange Fees for years.  Back in 1991 (simpler times?) there were 4 Interchange rates for Visa and 4 for MasterCard.   Today there are over 300 collectively.  (see illustration below)  Last week, Visa and MasterCard raised the fees yet again...

MasterCard and Visa Raise Interchange Swipe Fees – Again - from Stiel Blog

MasterCard and Visa increased the percentage it takes from merchants and consumers at the point-of-sale, effective April 15th. Merchants have no choice except to pass the higher cost along to every customer in the form of higher prices.

Effective last week (April 15), MasterCard will increase the “base rate” interchange rate for its World Merit III card from 1.73% + $0.10 to 1.77% + $0.10. Merchants actually pay higher fees because the “base rate” is marked-up to merchants based on the type of merchant and their credit card volume. That means many small merchants could pay over 3% to 9%, once all fees are added to the base rates.

Other “base rate” interchange increases disclosed by MasterCard included:

  • World Full UCAF (the rate for a world card e-commerce credit transaction conducted with merchant security and cardholder verification) will increase from 1.83% + $0.10 to 1.87% + $0.10.
  • World Merchant UCAF (the rate for a world card e-commerce credit transaction conducted with merchant security only) increased from 1.73% + $0.10 to 1.77% + $0.10.
  • The Supermarket Base and Enhanced Supermarket Base rates will increase from 1.48% + $0.05 to 1.48% + $0.10.
  • In addition, MasterCard will increase the assessment fee (a flat transaction fee added to the cost of processing each credit card sale) from 0.11 percent to 0.12 percent on consumer and commercial credit volume for transactions of $1,000 or more. 
For a complete list of interchange and fee changes released by MasterCard in April, please go to www.mastercard.com/us/merchant/support/interchange_rates.html .

Visa Inc. also increased fees with its Interregional Super Premium Card with a base rate of 1.97% per transaction. It also added four new Interregional Full Chip Cards with a “base rate” interchange rate of 1.10%. The new cards also add a 0.40% and 0.45% international service and acquirer fees.

Visa and MasterCard increase fees collected from merchants regularly in order to compete among themselves and encourage banks to issue their brand of cards to the hundreds of millions of Americans who pay with plastic. One bank president told us that the “decision over what card to issue is largely based on which one pays us the highest interchange fees.”
Enhanced by Zemanta

Disqus for ePayment News