Visa has announced that they will be making changes to interchange fees that merchants pay (basically the fee merchants pay to accept a credit card). The majority of this fee goes to the bank that issues the card (e.g Chase or Wells Fargo), generally 1.6%+. The rest of it is then divided between acquiring bank, payment processor and assessing processor. While the majority of the fee goes to the bank that issues the card, the payment network (in this case Visa) sets the interchange fees. The new rates will come into affect in April & October. Fee changes are as follows (according to documents seen by Bloomberg):
- Card not present (e.g online) transaction will increase from $1.90 to $1.99 on a $100 purchase. Premium Visa cards fee will increase from $2.50 to $2.60 on a $100 transaction
- Premium Visa card fee on a supermarket category will decrease from $1.15 to $0.77 on a $50 purchase
These changes could have a flow on effect for consumers that earn rewards points & miles. For example with interchange fee being lowered on grocery purchases card issuers might be less likely to offer a category bonus on groceries. In addition with card not present fees increasing online merchants such as Amazon might start requiring higher minimums for purchase (e.g Amazon sells low denomination gift cards currently).
I’ve read somewhere that debit cards now pay about 10-15 cents only at grocery stores on each debit transaction. No wonder Kroger won’t let you run your debit card as a credit transaction.
the card issuing banks wish they got 1.6% from the swipe fees. definitely not the case.
They absolutely receive 100% of the interchange what’s already over 1.6% for many cards. But swipe fees aren’t just interchange, there is also network fees plus the payment processor’s commissions.
I guess Kroger scarred Visa into lowering grocery rates
Good for Kroger!
Yikes! Being scarred would be frightening.
Don’t be scarred. Uh uhhh. Don’t be scarred.
It’s very weird that they just give a couple of examples instead of saying what the formulas are and were, so you can see the old and new fees on any amount. Is it a secret? Or do they think readers are too stupid to understand a simple formula?
It just like the term “as low as” when you watching ad.
Not really. It’s not like that at all, apart from lack of information.
You can search for “visa interchange fees” and find the complete tables across all merchant categories.
The full tables are very dry and not relevant to most people so it makes sense that a news agency would pull out specific examples for the story. If you’re actually personally affected by the changes, you’ll get access to the full document at the appropriate time anyway.
Thanks for that search suggestion. I see some information (probably previous formulas). It’s my curiosity to see what these are.
Really none of our Business.
Except if you run a business that accepts credit cards.