UPDATE: May 7, 2020: Visa is delaying until April 2021 the swipe-fee changes it had previously put off until July, with the exception of "planned interchange reductions in the supermarket segment," the card network said Tuesday in a blog post. "We believe this is the right decision to ensure the long-term stability of the digital payments ecosystem," the company said.
Separately, American Express and Visa each confirmed they are extending through April 2021 a deadline for U.S. gas stations to upgrade fuel pumps so they accept credit and debit cards with EMV chips. Card networks initially rejected a request to delay the compliance date, which had already been pushed back by several years.
"We have been speaking with fuel retailers and understand the challenges they are now facing in upgrading their [auto fuel dispenser] terminals because of the COVID-19 global health crisis," Melissa Filipek, director of corporate affairs and communications for American Express, wrote in an email Tuesday to Banking Dive.
Visa, in its blog post, said, "While we continue to believe EMV is the best way to decrease fraud, we recognize the supply chain and staffing challenges that are impacting the ability for gas station owners to complete the upgrade at this time."
Mastercard has not yet confirmed its plans this week to Banking Dive but, as of late March, was onboard with the July timeline.
“Now, more than ever, we’re putting all our power, capabilities, and technology to work to keep commerce flowing,” Seth Eisen, a spokesman for Mastercard, said in a statement, according to Bloomberg. “To help our customers and partners manage through this unprecedented event, we are pausing updates to some systems while delivering the same level of security and service they receive every day.”
- Visa wants its swipe fees to vary based on the merchant and the method by which a consumer pays for purchases, according to a document the payment network sent to banks and reviewed by Bloomberg.
- The interchange fee — the cut Visa and the card-issuing bank get every time someone pays with plastic — would jump for transactions on e-commerce sites and decline for purchases associated with real estate and education retailers, according to the document.
- Visa is planning to roll out the new rates in two phases, in April and October, to give processors more time to implement the changes, the document said.
Swipe fees are a bone of contention among merchants, banks and payment networks. Retailers paid $108 billion in 2018 to accept electronic payments, according to a Nilson report, and that figure is increasing as more consumers switch to premium cards, which charge higher swipe fees.
Among the sharpest fee increases are those in so-called "card-not-present" transactions — those made online or over the phone. The swipe fee for using a traditional Visa card on a $100 transaction will climb to $1.99 from $1.90, Bloomberg reported. For premium Visa cards, the fee will rise to $2.60 from $2.50. By contrast, the swipe fee on a $50 premium-card transaction at a large supermarket would fall 33%, from $1.15 to 77 cents.
Visa’s lower fees for certain service businesses are an effort by the network to add to the 61 million merchants worldwide that accept its cards. Fellow payment network American Express reported last month that it reached "virtual parity" in U.S. merchant acceptance compared with Visa and chief rival Mastercard.
Swipe fees comprise $52 billion of the $91.2 billion banks earn in fee income on credit card portfolios, Bloomberg reported, citing data from consultancy R.K. Hammer. Banks and payment networks can negotiate one-on-one deals with retailers for lower pricing.
"The U.S. credit interchange structure has been largely unchanged for the past 10 years," Visa said in the document. "Based on the most recent review in the U.S., Visa is adjusting its default U.S. interchange rate structure to optimize acceptance and usage and reflect the current value of Visa products."
The payment network would not comment to Bloomberg on the proposed changes. Mastercard also offered no comment to Bloomberg as to whether it’s proposing changes to its own swipe-fee rules.
The companies are often in lock-step. Banking Dive reported last month that the networks refused to further extend a deadline for U.S. gas retailers to upgrade fuel pumps so they accept credit and debit cards with chips — known as EMV payment technology.