Ongoing Effects of COVID-19 Compel Card Brands to Hold on Major Changes

We have learned that Visa, Mastercard and Discover will be holding off on some of their interchange updates this April. This is due in large part to the effects that many businesses are still facing from the coronavirus pandemic as well as some pressure from lawmakers.

With that said, the major card brands will be implementing some changes this year, but the intention is to hold some of the major updates until April 2022. These include changes originally slated to take effect April 2020 but were pushed out due to the pandemic.

Listed below are the changes that are still in play for April of this year.

Visa Fee Modifications
Commercial Credit Card Transactions

Visa is implementing rate changes that impact some Commercial Credit transactions while introducing a couple new interchange program categories for Consumer Cards. In addition, Visa will implement new interchange programs that apply to purchase transactions from bill payment service providers.

Fees for Excessive Fallback Transactions

Visa is also addressing the higher fraud risk associated with non-EMV chip card transactions. Starting in April, Visa will assess a monthly fee of $0.10 for each fallback transaction occurring at merchant locations with a fallback rate of 10% or above.

A fallback transaction occurs when the EMV chip card reader fails to complete the transaction, and the merchant is prompted to complete the sale by swiping the magnetic stripe on the credit card. The Fallback rate is calculated as the number of magnetic-stripe fallback authorization transactions per the total number of electronically read authorizations.

Mastercard Fee Modifications
Small Ticket Interchange Programs

Mastercard is introducing 10 new consumer credit, small-ticket interchange programs for transactions with a value of $5.00 or less in the US region. Although this new small ticket consumer credit rate program will be implemented in April 2021, the rates have been modified and set at current card-present and card-not-present levels.

Interchange Programs for Child Care, Prepaid, and Real Estate

Mastercard is expanding the Merit 1 interchange program by introducing new consumer interchange programs that apply to Child Day Care Services, merchant category code (MCC) 8351. Mastercard is also introducing new interchange rates for the Merit 3 Prepaid program and the Merit 1 Real Estate programs.

Discover Fee Modifications
Rate Changes for Consumer Debit and Prepaid Card Credit Voucher Transactions

Discover is modifying several interchange rates for Consumer Debit and Prepaid Card Credit Voucher transactions.

Program Integrity Fee

In addition, Discover is adding a new Program Integrity Fee to compensate for additional risk and processing costs related to the US Base Submission Level Program Card sales. It is an acquirer fee that Discover assesses on card sales that downgrade to or directly qualify for Base Submission Level Program Card sales. The fee will be $0.05 per US Base Submission Level Program Card sale.

Assessment Fee Reduction

Discover is reducing the Assessment Fee applicable to US acquirers from $0.022 to $0.005 per card transaction.
American Express/OptBlue

Signature Debit Interchange

American Express OptBlue is introducing a new signature debit interchange program. Assessment fees apply to the new debit card programs. Non-swiped Transaction (CNP) Fee and Inbound Fees:

  • Will apply to the Consumer Unregulated and Small Business Unregulated Debit Card Programs
  • Won’t apply to the Consumer regulated and Small Business regulated Debit Card Programs.
American Express OptBlue Fee Modifications

American Express OptBlue is modifying the Assessment & Sponsorship Fee. In addition, the Inbound Fee of American Express OptBlue is changing from 0.40% to 1.00%.

For further details on the each of the card brand updates, Wind River has compiled a full table of the fee changes.

If you have any questions relating to this update, please contact us. And as always, Wind River believes in transparency of all association fees applicable to your merchant processing costs, so we will be passing through any new fees with no mark-ups or changes.