If you follow payments industry news, you know that Visa and MasterCard are delaying their interchange rate increases again. If you’re a busy business owner who doesn’t have time to keep up with the ever-changing updates, we’re breaking them down for you. While this is overall good news, many small businesses will be taken advantage of because of these most recent changes. Make sure yours isn’t one of them.
Visa and MasterCard Interchange Update
Last year, Visa and MasterCard had planned to change interchange rates. The biggest change was to increase the rates on card-not-present transactions, which include card transactions made online or over the phone. The changes were slated to go into effect in April 2020, but the card brands delayed them for a year to avoid adding additional hardship to merchants combatting the economic effects of COVID-19.
Earlier this week, Visa and MasterCard announced that they will be delaying these interchange increases again—until April of 2022—because of the pandemic. “Visa is committed to maintaining stability in our payments system and will not make any future rate changes in the U.S. for another year while the economy recovers,” the company said in an emailed statement.
This is great news for small business owners who are still feeling the impact of the pandemic, not to mention many of whom are reliant on online and over the phone orders now more than ever.
So, Business Owners’ Rates Are Staying the Same?
Not exactly. The answer should simply be yes. If you’re a Beyond client, that’s your answer and you can stop reading here. As outlined in the Beyond Promises, “If we don’t provide additional value, we don’t charge additional fees. We will never arbitrarily raise your prices as long as your business methods and transaction volumes don’t change significantly.”
Unfortunately, that’s not the case for most U.S. payment processors.
Why Many Processors Will Still Raise Your Rates
If you process payments through a company other than Beyond, there’s a good chance you’ll still see a fee increase. It’s no secret that some credit card processing companies take advantage of the complex nature of the industry to increase their profits any chance they get. This is a prime example.
Ahead of card brand interchange updates, most payment processors pass the fee increases onto their merchants. Some companies continually raise their rates even when their costs to Visa and MasterCard haven’t increased and choose not to pass through lower rates in those rare instances when the card brands reduce their rates on specific transaction types. That’s why you’re probably used to seeing a small note like this on the bottom of your monthly statement.
Many companies have already instated these fee increases for 2021—and you can bet they aren’t taking them back because the card brands are trying to do the right thing. The relief Visa and MasterCard are attempting to give to small business owners across America is likely to benefit large credit card processing companies that take advantage of their customers. Don’t let that happen to you.
What You Should Do Today
Check your last couple monthly processing statements for a notice that says something like “your payment processing fees will be increased to offset the rising cost of transaction processing.” Take special note of this warning now because Visa and MasterCard are NOT raising transaction processing costs for at least another year. If your processor is, there’s something to think about.
Beyond was built on principles against this exact type of bad act. We believe in protected pricing, transparent statements, and the highest level of ethics in business practices. Learn more about these and our other promises to clients.
Questions? Request a complimentary statement analysis today.