Card brands delay spring swipe-fee update to July, citing coronavirus' effect on retail
With the semiannual interchange update from the major card brands due in April, acquirers began notifying merchants late last week that those changes — which in some cases represent higher rates for certain types of businesses and cards — have been postponed until July.
With coronavirus presenting significant challenges for retailers and the technical challenges of imposing interchange fee changes in the networks, Visa, Mastercard, American Express and Discover are holding off on the updates.
The so-called spring update on April 17 has been moved to July 17, in a move to support business continuity at a time when payment habits are dramatically shifting to digital channels. The coronavirus pandemic is forcing many people to shelter at home, leading many brick-and-mortar stores to shut down temporarily or permanently.
"With so many resources working from home and having reduced capabilities to deal with unforeseen challenges and the changes, the card networks felt it was in everyone's best interest to hold off," said John Drechny, CEO of the Merchant Advisory Group.
Normally, during the release of new interchange rates, the networks monitor transaction traffic and data quality so that any irregularities that occur can be fixed quickly, said Drechny, who noted all four card brands had notified his organization of their intentions.
"From our perspective, this is a welcome change," he added. "Not only because it adds surety of transactions working the seamless way they do today, but it also gives some of the hardest hit businesses a reprieve on interchange increases that were scheduled to be implemented."
Mastercard confirmed its intention to institute a delay in a note to PaymentsSource, saying it is "pausing updates to some systems while delivering the same level of security and service they receive every day … this is one way we can help them focus on their core systems operations and resiliency efforts to meet the needs of consumers and business."
Meanwhile, Visa said it is "committed to partnering with our clients during this difficult time. We are actively implementing and considering a number of ways we can proactively support our clients to ensure the stability, security, reliability and resiliency of the digital payments ecosystem.”
In confirming its intentions to delay its spring interchange release until July 17, Discover noted it was taking the necessary steps to "maintain our commitment to our clients and customers."
The company said it recognizes the operational challenges many organizations are facing, with the "majority of business operating remotely." Discover plans to monitor the ongoing situation with its clients to determine what other actions are needed, calling for customers to keep in touch with the network so it can help with specific needs or concerns on a "case-by-case" basis.
The card brands' decision comes a week after the National Restaurant Association delivered a message to the White House and congressional leaders to consider cutting interchange fees as part of the coronavirus rescue plan in the U.S.
The restaurant association was predicting the industry sales could drop by $225 billion in just the next few months, along with job losses for up to 7 million people. Interchange relief was only one factor the restaurants were seeking in the aid package, along with tax relief and federal loan programs.
Late last year, Visa revealed its intentions to adjust interchange rates in a manner that would lower some rates, but would increase others — especially for card-not-present and mobile transactions.