Visa is overhauling its interchange rate structure, according to a published report, a move that could mean higher fees for some types of corporate travel bookings made with Visa cards.
The payment network is increasing interchange rates for some types of purchases while decreasing others, according to a report by Bloomberg. Among the fees due to rise are those for card-not-present transactions, including most online and phone-based payments. Those fees would go up to 1.99 percent of the purchase price from 1.90 percent for most Visa cards, Bloomberg reported, citing a Visa document circulated to banks.
That could mean higher fees for payments made with Visa corporate cards for bookings made through global distribution systems and online travel booking platforms, as well as virtual card-based purchases, all of which typically are classified as card-not-present transactions.
The new rates would be implemented in two phases—one in April, another in October—in order to give payment processers more time to implement the changes, according to the report.
Interchange fees are set by payment card networks like Visa, but technically are paid by the merchant to the card-issuing bank. A percentage of the fee then is passed along to the network. Some merchants, particularly major retailers, are able to negotiate their own deals at lower fees that the standard rates.
Though typically comprising just a small percentage of a given purchase, interchange fees have become an important revenue stream for credit card issuers. After European Union legislation capped such fees at 0.3 percent took effect in late 2015, AirPlus International suffered more than €12 million in lost profits in one year as a direct result of the caps, according to the company.
The new Visa rates could impel Mastercard to follow suit, according to some analysts, as the two payment networks' interchange rate structures typically are similar. In 2018, Mastercard and Visa, along with several major banks, agreed to a $6.2 billion settlement in a class-action lawsuit brought by merchants in 2005 over allegations of price fixing on interchange fee rates. The amount was the largest antitrust settlement in U.S. history.