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Visa Plans to Lower Maximum Surcharge

Visa plans to lower the maximum surcharge merchants can impose when consumers use credit cards to pay for a transaction.

In a January notice to merchants, Visa stated that any surcharges on credit card purchases must be capped at 3% of the transaction, down from 4%, beginning April 15. “The maximum amount will now be included in the Visa Rules,” according to the January 12 notice  IntelliPay will implement the new lower maximum cap on April 1. Merchants should have received notification from their relationship manager.

Merchants recoup fees

Merchants that accept credit cards from their consumers can legally add surcharges to the purchase amount to recoup the interchange fees they pay the bank card issuers, networks, and other middleman processors whenever a customer swipes/dips/keys a card. The surcharges have increased more often in recent years as higher interchange fees have impacted merchant margins.

Over more than a decade, interchange fees have been a constant source of friction between merchants and the companies that impose them. Banks that issue credit cards work with the card networks, such as Visa, to determine the interchange fees. As a result, some lawmakers and regulators have sought for decades to curb the fees and put restrictions on imposing them.

The average interchange fee for Visa and Mastercard card transactions in 2021 was 2.22%, according to a report from card industry research firm the Nilson Report last year. Still, that average likely edged up last year following increases for some cards.

The threat of regulation looms.

Some payments industry professionals believe that Visa is worried about consumers complaining to regulators that surcharges increase the cost of purchases because those complaints could trigger more industry regulation. The experts explained that the industry is more regulated with respect to fees in some other countries, including the United Kingdom.\

“Visa does not want to be fighting the same regulations here that they’re fighting in the U.K.,” the experts contended.

Adapted from Visa aims to lower credit surcharge, Payments Dive, March 2, 2023