MasterCard Says It Won't Raise Interchange Fee

MasterCard International will not raise the fee that banks pay each other to settle credit card transactions in the coming year.

The decision, announced on Monday, follows a similar move by Visa U.S.A.

The closely watched charges, known as interchange fees, strongly influence the prices that banks charge their merchant customers to handle MasterCard and Visa sales. Merchant banks pay a cardholder's institution an interchange fee each time they process a card transaction.

The bank card associations typically announce revised interchange schedules each summer, which take effect the following April.

Merchant Rebellion

By keeping rates flat in 1992, the card associations hope to benefit from the well-publicized problems American Express Co. is having with some of the merchants that accept its card. Unhappy over the discrepancy between the cost of taking American Express and other credit cards, some merchants have publicly complained about American Express's fees.

American Express has since lowered some of the fees it charges restaurants that accept its card, narrowing the difference between its prices and those of the bank cards.

Both MasterCard's and Visa's interchange rates vary according to how transactions are authorized and settled. In addition, Visa offers variable merchant pricing, with different fees for airline, hotel, and certain other industries.

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