Ideal Cost Reacts: LowCards’ “Visa Plans to Adjust Swipe Fees For First Time in 10 Years”
We chose to review this article because the website purports to be an expert in all things credit card related. In reviewing the website, it appears to be related mainly to the credit card issuing side rather than the merchant acceptance side. In this piece, they are interpreting a recent report from Bloomberg.
The website has an affiliate disclosure, but in this article appears to lack any actual affiliate links.
Let’s see if they are right about adjusting swipe fees.
Visa’s Rate Increase
“Visa is planning to adjust the rates merchants pay for credit and debit card processing, according to a new report from Bloomberg. Visa’s fees will vary based on the type of transactions a merchant processes. This will accommodate new business structures, such as ride-sharing services.
Bloomberg quotes a document that Visa sent to banks about the upcoming changes: “The U.S. credit interchange structure has been mostly unchanged for the past ten years. Based on the most recent review in the U.S., Visa is adjusting its default U.S. interchange rate structure to optimize acceptance and usage and reflect the current value of Visa products.
The proposed fee structure will include higher fees for e-commerce sites and other card-not-present transactions, as well as lower fees for education and real estate transactions. Traditional Visa cards and Premium Visa cards will have two different fee structures, which will also vary by merchant.
Visa is planning to implement these changes in April and October, giving merchants a chance to adjust for the projected fees. By lowering swipe fees for select industries, Visa hopes to ultimately encourage more customers to use cards instead of cash or a check.”
There is so much wrong; it’s hard to know where to start.
First, Visa hasn’t left rates unchanged for anywhere close to 10 years. They are always increasing and adding new fees. The only thing that is mainly left unchanged is the classification of card types within the interchange structure. The structure does not currently have a specific classification for ride-sharing, so companies such as Uber and Lyft must have done some serious lobbying to make these changes.
Second, the term “swipe fees” means something very specific. These are fees associated with physically swiping a credit card. Now, swiping has mostly been replaced with chip-acceptance. e-commerce and card-not-present transactions are not “swiped.”
Third, even if Visa lowered interchange fees for several categories, there would be little change in consumer behavior. Most card consumers are entirely unaware of the interchange rate associated with each of their credit cards. Therefore, how would Visa hope to encourage more customers to use their cards more than they already do?
Fourth, interchange fees and categories don’t always affect merchants. They always affect credit card processors, so some may receive interchange discounts and refuse to pass the savings on to their merchant clients.
This article contains very little in the way of completely accurate information. The author doesn’t appear to have any experience in the credit card processing industry, so his real mistake was attempting to interpret a report he doesn’t truly understand. To his credit, he may be quoting from a report that also has a lot of mistakes, but a real expert would know that.
We give this article a D-.
Don’t Take On The Credit Card Processors By Yourself
Since 2009, IdealCost.com has helped hundreds of companies nationwide reduce their merchant account fees through identifying and fixing hidden profit, overcharges, fake fees, and billing errors. Clients have saved $300-$20,000 per month on their credit card processing fees without going through the hassle of changing their processing vendor, bank, or equipment. Switching credit card processors should be a last resort, only reserved for funding delays, poor customer service, or technical difficulties. Before you consider switching credit card processors, see if you qualify for IdealCost.com’s monthly savings program. Upload your most recent merchant statement for a free analysis. You’ll receive an estimate within 24 business hours.
If you are opening a new credit card processing account or switching credit card processors, feel free to contact us for a free consultation. IdealCost.com can help secure the best terms and fees based on your specific needs.