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Industry Updates

Visa Looks to Gain Market Share by Changing Merchant Fee Structure

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Retailers spend more than $100 billion annually to accept electronic payments, but Visa will soon knock off a few pennies for merchants in certain categories to boost acceptance of its cards, according to Bloomberg

In 2019, the company’s cards were accepted at 61 million locations worldwide, a 14 percent increase from the previous year, but President Ryan McInerney said at an investor conference recently that “we have a lot more work to do.”

Visa is planning changes to its interchange rates — fees charged every time a consumer uses a card — to U.S. merchants beginning in April, according to a document obtained by Bloomberg. The company’s rates will go up or down depending on the merchant and the way a consumer pays for their purchases.

“The U.S. credit interchange structure has been largely unchanged for the past 10 years,” Visa said in the document. “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.”

Retailers in certain categories like healthcare, real estate, large supermarkets and education will see a decrease in Visa’s fees as part of its push to gain market share. On a premium card transaction of $50 in a large supermarket, for example, the interchange fee will drop 33 percent to 77 cents from $1.15. 

Higher rates are expected for transactions on e-commerce sites. Visa’s rate changes for online or over the phone purchases totaling $100, for example, will increase from $1.90 to $1.99. For premium Visa cards, the fee will rise to $2.60 from $.250, according to Bloomberg.

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