Visa and Mastercard are postponing the credit-card fee increases they had planned for this year after the fee increases drew criticism from lawmakers.
The credit card companies cited the continuing effects of the coronavirus pandemic on businesses as the reason for the delay. The higher interchange fees for merchants are now delayed until next April.
“Recognizing U.S. businesses are still facing many challenges posed by the COVID-19 pandemic, Visa has decided to significantly modify its planned April 2021 business release to delay the implementation of a number of interchange rate changes,” said a Visa spokesperson.
Mastercard made a similar statement explaining that its reasoning for delaying the fee increase is related to the economic downturn brought on by the pandemic.
“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. 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,” a Mastercard spokesperson said in a statement.
The swipe fees are what merchants pay when a customer pays by card. These fees are often higher when making online purchases.
Visa and Mastercard’s plans included raising interchange fees for many online purchases by around 0.05 to 0.10 of a percentage point. According to estimates from CMSPI, the changes would have resulted in hundreds of millions of dollars in additional interchange fee charges for merchants within a year.
CMSPI also expects to see a net income from the fee increase of $768 million a year for Visa and $383 million for Mastercard, or a total of $1.15 billion
When Visa first revealed the changes to the fees, it said the interchange rate for so-called card-not-present transactions, which include transactions made online or over the phone, for a traditional Visa card, the fee on a $100 transaction would climb to $1.99 from $1.90. For premium Visa cards, the fee would increase to $2.60 from $2.50.
Retailers and politicians alike had asked the credit card companies to delay the hike in the rates when many consumers are reliant on online shopping to obtain daily goods.
“We urge you to call off these planned fee increases. Our nation is still reeling from the ongoing pandemic,” Sen. Dick Durbin (D-IL) wrote in a letter this month with Congressman Peter Welch (D-VT) to the card networks’ chief executive officers.
Many Congress members argued that the fee increases were coming at the worst time for the American economy.
