interchange and credit card processing

Are Interchange Rates: Going Up or Down?

In March, Business Insider published an article outlining interchange fee rate hikes by Visa and Mastercard scheduled to take place this month. The credit card networks had planned to implement these rate hikes for U.S. merchants earlier, but the pandemic delayed the rollout. Not surprisingly, though any rate hikes will affect all businesses that accept payment cards, large merchants—especially those that accept premium rewards cards like commercial airline cards—as well as most small and medium sized businesses, stand to hurt the most from increased fees.


Or Maybe Going Down?
But here’s where it gets complicated. A recent story in Reuters stated that instead of raising fees, Visa was planning to lower its interchange fees in April by 10% for small businesses that process less than $250,000 for both in-person and ecommerce purchases. The story also reported that Mastercard has plans to lower fees for selected business categories, as well as for small credit card transactions totaling less than $5.00. 

So, what’s going on here? 


Paying the Piper
Interchange fees are a necessary evil for merchants, regardless of their industry or sales volume. The purpose of assessing interchange fees is to mitigate the risk banks and credit card networks take associated with processing credit and debit card transactions. The actual fee a merchant pays depends on factors such as the type of card used, the transaction type, and the type of business, among other things. These factors, combined with the risk of fraudulent transactions, influence how the card networks assess fees.

While you can’t get away from interchange fees altogether, you can lower your costs by keeping your software up to date with the latest fraud fighting solutions. Here are some tools you can use help fight fraud for both in-person and online transactions. 

  • 3D Secure 2.0 (3DS2). This industry authentication protocol adds a layer of protection to card-not-present transactions by verifying the customer’s identity through strong, two-factor authentication. Using 3DS2 enhances security for online transactions, which helps prevent fraud.
  • E4F. This is a service that provides multiple levels of automated and manual processes to detect fraudulent activity. It screens and verifies transactions in a matter of seconds, and any transactions that fail automatic verification will be flagged for manual inspection and verification.
  • Portable card readers. If you interact with customers while you’re on the go, such as at a farmer’s market, a hand-held card reader is a must. By swiping the customer’s card at the time of the transaction instead of manually keying in the payment information later, you can safely and securely accept payments and lower the cost of interchange fees.


Your Partner For Lower Fees
If you’re looking for a company that understands interchange fees and the changing landscape of interchange and credit card processing, look no further than Cartis Payments  Call us today!