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Visa is planning changes to swipe fees: report

The changes contemplated are the biggest in a decade

Summary

Different categories of retailers would see different impacts, with swipe fees either going up or down.

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Payments processing company Visa Inc. is coming up with changes to the rates that merchants will pay to accept its cards, according to a news report from Bloomberg.

The changes contemplated will be the biggest in a decade, according to the Feb. 4 report, which Bloomberg says is based on a document sent to banks that has been seen by the news service. Responding to a query asking for comment, a spokesperson for Visa said that the company did not have any further comment at this time.

Changes in so-called “swipe fees” mean consumers could pay more for using their credit cards if merchants pass along fee hikes to them. A lot of card issuers also share swipe fees with customers through rewards programs, as an incentive to get consumers to use their cards.

See related: How to accept credit cards

Visa delays implementation because of pandemic

Visa had planned to implement the changes in two stages, in April and October. However, the company has delayed the rollout of the changes to April 2021, taking into account the impact of the coronavirus pandemic, according to a Visa update.

“The exception is the planned interchange reductions in the supermarket segment will go forward. We believe this is the right decision to ensure the long-term stability of the digital payments ecosystem,” according to the company.

The company has also extended its deadline for gas station owners to upgrade their payment systems to accept EMV cards and contactless cards to April 2021, taking into account the staffing and supply chain issues the pandemic has brought about.

The changes could impact various categories of retailers differently, with either higher or lower swipe fees.

For instance, Visa is contemplating higher fees for transactions with online retailers, while rates for transactions related to education and real estate are slated to go down.

  • For “card not present” transactions made online or over the phone, swipe fees are slated to rise to $1.99, from the current $1.90, on a $100 transaction.
  • In the case of a similar transaction using a premium Visa card, the swipe fee will rise to $2.60, from the current $2.50.

However, swipe fees tied to the use of a premium Visa card at large supermarkets, the rollout of which Visa is not delaying, will go down. Ted Rossman, Creditcards.com industry analyst, noted that this is especially noteworthy.

“In 2018 and 2019, Kroger banned Visa cards from hundreds of its stores, citing high swipe fees,” Rossman said. “When they ended the ban in late 2019, it initially seemed like Kroger was backing down, but now it appears that the grocer won significant concessions from Visa.”

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