Mastercard And Visa Postpone Planned US Interchange Hikes

Noting that the progress of the U.S. economic recovery is at a fragile stage, both Mastercard and Visa announced on Tuesday (March 16) that they have each postponed planned hikes in interchange fees. Both companies had announced previously that they would increase fees starting in April, but have now reconsidered and will delay those changes until April 2022.

“We are encouraged by the signs of economic recovery that we’re seeing in the U.S. and in other markets with the continued approval and availability of effective vaccines,” read a statement emailed to PYMNTS by Mastercard. “Mindful that some merchants are still facing unprecedented circumstances, and consistent with our earlier commitment to be thoughtful on the timing of implementation, we are delaying our previously announced interchange adjustments in the U.S. until April 2022.”

Visa also postponed its planned hike. In a statement sent to Bloomberg, the company said: “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.”

Interchange fees are set at a base rate by credit card companies, but are often part of bank and merchant negotiations. Mastercard had planned to increase interchange fees in the U.S. to cover the cost of increased fraud protection as consumers shifted to the digital-first economy. But it was coupled with planned increases in “swipe fees” that would have added costs to the beleaguered restaurant business as well as independent grocery stores. In its statement, Mastercard highlighted its previous support of SMBs as part of its postponement consideration.

“Mastercard supports our merchant partners by enabling them to keep their businesses open with safe, secure and reliable payments for both in-store and online purchases,” it said. “Last April, we committed $250 million over five years to support small businesses in the United States and other markets with resources to help protect them, including free cyber and identity theft solutions.”