Card Fees: The Game has Changed Once Again

Guest Blog from CMSPI's Joshua Pynn

The global networks have, after two years of delays, decided to move ahead with significant fee changes this month that could affect almost every merchant in America. Swipe fees are incredibly complex, and these changes are creating additional nuances that make it difficult for all merchants – large and small – to make sense of them. Retailers in the U.S. are playing a proverbial game when it comes to the costs of payments acceptance, but the rules are unclear, and they are changing constantly. Merchants could potentially see costs rise by the thousands, if not millions, of dollars with these changes and understanding their impacts is critical to effectively budgeting the cost and creating mitigation strategies in 2022.

The U.S. has the highest and most complex card fee structures on the planet.

In the U.S., there are almost 200 different interchange programs that are charged to merchants, and there could be anywhere between 3 to 8 different rates within them depending on the card type. That means, depending on numerous factors such as merchant/issuer location, industry, entry method, and other criteria, there are over 1000 different interchange rates that merchants could be paying on a monthly basis.

The global networks publish their interchange rate tables for merchants to access, but they list out every possible fee available; it could take days to read through them to even begin to piece it all together. Network fees charged by the brands don’t make the game any easier to understand either, as there are dozens of them that all apply to a different subset of your transaction profile. These two fee sets, along with the numerous ancillary fees merchants will incur from their processors, such as reporting fees, portal access, and more, plus the costs of fraud solutions on top, leave them wondering what the rules of the game even are. Even the savviest payments teams in the world can struggle to understand their complexities, now imagine the impact on Main Street businesses.

If fees weren’t already confusing enough, the rules of the game are changing in April.

If we listed every change coming this April in this article, War and Peace would look short in comparison. Instead, we’ll address some of the key adjustments you may need to be aware of. The fee changes announced are not only wide in scale, but broad in scope – most merchants in the U.S. will be affected slightly differently depending on their card mix, even those in the same industry. Mastercard’s announced fee changes, for example, affect over a dozen existing programs, including downgraded transactions and refunds. While many of the changes are increases, such as those in Mastercard’s Merit I and Merit III programs, some are more multifaceted, with increases and decreases coming within the same program. Restaurants, for example, might see the change come as a small increase or even a decrease, while some will see large increases. Visa, on the other hand, has announced increases to their core online program entitled Product 1, which will affect most online consumer credit transactions.

Interchange is not the only fee type that is changing in April either: the Digital Enablement Fee, a network fee charged by Mastercard, should see a nuanced change as well. This fee is not only seeing an increase from 0.01% to 0.02% on most online Mastercard spend, but also the additional complication of a minimum and maximum charge per transaction. With this change, Mastercard is eliminating fees for other ancillary fraud services like the card not present AVS fee and the 3DS 2.0 fee.

It’s important for merchants to assess what services they are using today so they can accurately estimate how the overall change will affect their budget. These are just two examples of the various complexities surrounding the fee changes expected this month but, ultimately, CMSPI estimates that the changes to both interchange and network fees could result in an aggregate $557 million in increased annual costs for merchants.

How can merchants work to understand their fees?

Playing a game without knowing the rules can be frustrating and an unpredictable experience. Card acceptance fees are incredibly complex and rising, leaving merchants in a confusing struggle to predict the cost of payments. This financial uncertainty creates a huge burden for merchants; difficulties around forecasting budgets means fewer resources left to innovate, develop new customer experiences, enhance loyalty programs, and take advantage of other opportunities that differentiate your business from the rest. On top of this, with rising fees, the total available resources not tied up in simply accepting payments dwindles. Having a clear understanding of your costs, and utilizing cutting edge mitigation strategies to reduce them, is crucial to achieve a market leading position in your industry.
For more information about how CMSPI can help you reduce your cost of acceptance, please reach out to Josh Pynn at
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