After over a year of notices from the card brands regarding their fee increases, Visa and Mastercard announced on March 16, 2021, that they are pushing back planned changes to their interchange rates and fee structures.
Both Visa and Mastercard had announced that the modifications would go into effect on April 1, 2021. However, due to legislators pushing back against the hikes in an effort to support economic recovery, the April 2021 changes have been postponed until April 2022.
The April 2021 release was set to increase merchant card fees for select transactions. Among the various fees, some increases would have applied to card-not-present transactions including online payments. These changes were pushed to April 2022.
This is the second delay from the card brands, as all changes and fee increases were originally set to be put in place April 2020. However, shortly before these were to be implemented, they delayed the majority of the fees due to the coronavirus pandemic.
- The card fee adjustments are a point of contention because they primarily target e-commerce, which most merchants have relied on throughout the pandemic.
- There’s been a rise in online payments throughout the crisis, driven by a surge in e-commerce. This shift was vital during U.S. lockdowns when most brick-and-mortar merchants closed temporarily and often operated completely online.
- Many merchants kept their online business going even as lockdown restrictions eased. In June 2020, 27% of U.S. small and medium-sized businesses (SMBs) began selling online for the first time. By January 2021, 43% of them were actively engaged in selling online, according to Visa’s 2021 Back to Business Study.
- Even as pandemic conditions improve, e-commerce will remain an important sales channel for merchants. More than 40% of consumers say they would not shop in-store more than they currently do after being vaccinated, per a First Sight study cited by CNBC.
These delays will certainly bring some relief to businesses over the next year but will likely be a point of contention again next spring. As things continue to change and evolve, we will keep you informed.