Visa Inc. and MasterCard Inc. are planning to introduce new fees for merchant acquirers as part of their updated rate schedules.
Beginning April 18, MasterCard will collect a network access and brand use fee of 1.85 cents on each transaction, but it will lower its acquirer access fee by half a cent, to 0.15 cents an authorization.
Beginning July 1, Visa will charge a U.S. acquirer processing fee of 1.95 cents for each transaction, according to information some acquirers are distributing to their sales agents.
Neither company has imposed such fees in the past.
Greg Cohen, the president of Moneris Solutions U.S. in Schaumburg, Ill., predicted that acquirers will likely increase the fees they charge merchants.
"Most, if not all, acquirers will pass these increases along to merchants," Cohen said in an interview Wednesday. The fees are "too steep to try and absorb." He would not say how Moneris plans to handle the fees.
Sam Caine, the president of the Frisco, Texas, acquirer Card Payment Services Inc., said the new fees will be paid to the card companies, rather than issuers. "The only difference" between these charges and other fees "is who gets the money."
Card Payment Services' large merchant clients are likely to see the fees as line items on their statements, he said, and the charges will be incorporated into other pricing models for small merchants.
The Food Marketing Institute, a merchant trade group, is unhappy with the new charges.
"These new fees are like putting salt in an open wound," Jennifer Hatcher, group vice president of government relations at the group, wrote in an e-mail Wednesday.
The Arlington, Va., trade group is a member of the Merchants Payments Coalition, a Washington coalition that opposes what it has called "unfair" credit card fees.
"The announced 200% increases in the Visa access fee and MasterCard brand usage fee will cost even relatively small companies hundreds of thousands of dollars," Hatcher wrote. "As far as we are concerned, this out-of-control behavior clarifies the need for a legislative remedy to this broken market."
MasterCard's April 2009 rate schedule is now available on its Web site. Visa has not released its revised schedule. The two companies typically update their interchange rates in the spring and in the fall.
Visa said it "regularly reviews its pricing, as any business would, and makes adjustments where appropriate, depending on such factors as the value delivered to clients and the need to be competitive."
MasterCard said it does not discuss pricing changes "until the impact flows through our financial statements." Interchange makes up part of the discount rate merchants pay acquirers.
In addition, MasterCard plans to introduce a "high value" interchange tier that carries a higher rate than some other tiers. For example, the restaurant interchange rate in that tier will be 1.73% of the sale plus 10 cents, compared with the "CPS restaurant" rate of 1.54% plus 10 cents.
MasterCard did not offer a definition for the new tier, but Hatcher wrote that it may be related to certain types of reward cards.
"Merchants are hurting, trying to keep afloat in perhaps the most challenging economic times in a generation," she wrote. "It is simply unconscionable to introduce a new 'high value' rewards card to fund credit card company profits and airline miles to a few elite rewards cardholders on the backs of the millions of newly unemployed. Because of credit card rules, merchants have to take the elite rewards cards, regardless of the price tag."