Payment Network Pass-Through Fee Changes Beginning April 1, 2021

An interchange fee hike initially set to be implemented by Visa in April of 2020 is now planned to take effect in April 2021, one year after legislators and other opponents successfully halted it in its tracks in large part because of the COVID-19 pandemic. Mastercard is also planning such hikes, according to the Wall Street Journal.

Bloomberg’s previous reports said the Visa swipe fees would rise from $1.90 to $1.99 for regular Visa cards and from $2.50 to $2.60 for premium cards on a $100 transaction the biggest changes to these fees in a decade. Higher rates would be charged for e-commerce transactions, while merchants in some service categories, such as real estate and education, would see fees decline, Bloomberg reported. Mastercard’s swipe fees will likely rise in line with those charged by Visa.

Changes to Credit Card Pass-Through Fees

Beginning April 1, 2021 (Visa Change):

• Visa’s Acquirer Processing Fee (APF) will include debit and credit authorization reversals for all U.S. and non-U.S. transactions.
• Visa will increase the Zero Amount Verification Fee for credit verification requests from $0.025 to $0.035.
• Visa will increase the Zero Amount Verification Fee for debit verification requests from $0.025 to $0.030.
• Visa will introduce a new High Fallback Transaction Fee if you have fallback transactions greater than 10% of your chip card-eligible processing volume. This fee will apply if you “fall back” and swipe the magnetic strip on a chip card instead of using the chip insertion feature when you have chip card-enabled point-of-sale equipment.

Effective April 17, 2021 (Visa, Discover, and American Express Change):

• Visa will introduce a new International Verification Request Fee of $0.070 which applies to credit or debit Zero Dollar Verification requests where the merchant is located within the U.S. and the card issuer or cardholder is located outside of the U.S.
• Discover will introduce a new Program Integrity Fee of $0.05 for transactions that qualify under the Base Submission Level or Commercial Base Submission Level interchange programs.
• Discover will introduce a new Ticket Retrieval Fee of $1 which will apply to all ticket retrieval requests.
• Discover’s Network Authorization Fee of $0.0190 will be passed through to you on all purchase authorization requests.
• Discover will decrease the existing Data Usage Fee from $0.0195 to $0.0025 on all Discover transactions.
• American Express will increase the existing Assessment Fee from 0.15% to 0.16%.

Effective April 25, 2021 (Visa Change):

• Visa will introduce a new Decline Transaction Resubmission Fee for U.S. and non-U.S. transactions.
• Visa had previously modified its rules to allow a maximum of 15 authorization re-attempts over a 30-day period following a decline under Decline Category Codes 2-4. Visa does not allow for any authorization re-attempts following a decline under Decline Category Code 1. This new fee will apply as follows:

1. The fee will apply to any and all subsequent authorization re-attempts after receiving a decline under Decline Category Code 1 which covers various decline response codes.
2. The fee will apply to the 16th and each subsequent authorization re-attempt after receiving a decline under Decline Category Codes 2 – 4 which covers other various decline response codes.

Effective July 1, 2021 (Visa Change):

• Effective July 1, Visa’s Misuse of Authorization Fee will include authorizations on purchase returns.
• Effective July 1, Visa’s Zero Floor Limit Fee will include authorizations on purchase returns.

Perhaps not surprisingly, legislators are again beginning to push back against the increased fees, asking that Visa hold back on the interchange hikes scheduled for April and that Mastercard does the same. On March 3, U.S. Dick Durbin, Senate Majority Whip and Chair of the Senate Judiciary Committee, and U.S. Representative Peter Welch (D-VT) sent a letter to Mastercard CEO Michael Miebach and Visa Chairman and CEO Alfred F. Kelly, requesting that neither Mastercard nor Visa go through with the plan.

This is the second attempt by Durbin and Welch to prevent interchange fees from rising during the pandemic. As COVID-19 began to surface last March, they asked Mastercard and Visa to delay the increases for one year.

Durbin and Welch assert in the letter that moving forward with higher swipe fees at this juncture would be a “mistake” and would disproportionately affect online transactions. “Just as increased vaccination efforts start to give our Main Street businesses hope for a summer reopening, your companies propose slamming struggling merchants, and by extension consumers, with fee increases”, the legislators write. “Raising your fees would undermine efforts to help the economy recover and further reduce Americans’ purchasing power.

We urge you to call off these planned fee increases. Our nation is still reeling from the ongoing pandemic. And your fee rates are more than high enough already. This is not the time to take advantage of your position to squeeze more dollars out of your fellow Americans”.

E-Complish will continue to keep an eye on developments about plans by a Mastercard and Visa to bump up swipe fees. Schedule a consultation to learn about it in more detail.