Visa and Mastercard announced that they will delay the release of their new interchange fee structure in response to the economic slowdown due to the coronavirus, reports Bloomberg. Originally, Visa and Mastercard planned massive increases in their e-commerce interchange fees among others, that would have been rolled out in April. The network announced on Friday that they will postpone the new fee structure until July when it will take effect.
In February, Visa, followed by Mastercard, announced that in a two-pronged rollout it would release its new fee structure in April and October 2020. Sectors like real estate, the auto industry and education would see rate decreases, while the fastest-growing sectors like e-commerce and mobile ordering, would see a massive hike in fees. An outside analysis estimates that the new fee structure would equal $250 million in additional fees to merchants.
For NACS members and retailers across the country, interchange fees, also known as swipe fees, are retailer’s second highest operating expense behind labor. These fees are set by the major card networks and collected by the banks who issue the cards. Most consumers do not realize retailers are charged a huge fee on every credit card transaction.
“Retailers are relieved to see Visa and Mastercard acknowledge the added damage their swipe fee increases would impose on businesses trying to stay open during this crisis. We hope Visa and Mastercard will learn from this that they should stop fixing the fees entirely and let banks set their own prices,” stated Lyle Beckwith, NACS senior vice president of government relations.
On Thursday, Senator Dick Durbin (D-IL) and Congressman Peter Welch (D-VT) sent a letter to Visa and Mastercard asking them to delay their new fee scheduled. “Now is not the time for further interchange fee increases, especially while the coronavirus is upending our economy, small businesses are struggling to stay afloat, and working families are worried about when they will receive their next paycheck,” stated the lawmakers.
Last week, NACS sent joint association letters to the four major credit card networks asking them to delay the EMV liability shift deadline for automated fuel dispensers (AFDs) given the extreme circumstances retailers are facing in light of the coronavirus pandemic and its ensuing disruption on the workforce and supply chain.