Visa will increase how much it reimburses banks to issue new cards compromised by merchants' data breaches, after some banks complained that the card network's payments were too low.

The San Francisco company will reimburse banks on a tiered structure, rather than a flat rate of $2.50 per card, when issuers must replace cards because of fraud, according to the American Bankers Association. Visa decided to make the change after the ABA lobbied the company, the ABA said.

Visa declined to comment on the change in reimbursement rates, but confirmed the details.

Visa's policy change is "an important step that helps ensure that banks won't incur excessive -- and inequitable -- costs for taking action to protect their customers from fraud," John Ikard, the ABA's chairman, said in a statement.

Community banks in particular had complained that Visa's reimbursements did not cover their costs. A federal judge this month rejected a lawsuit filed by group of community banks and credit unions, which attempted to block an agreement between MasterCard and Target for reimbursement rates.

Banks with less than $500 million in yearly Visa purchase volume can qualify to receive $6 per card. Banks with between $500 million and $10 billion in purchase volume will receive $3.85 per card. Banks with more than $10 billion in volume will receive $2.65 per card. Issuers will also receive an extra $1 per card, for every EMV chip-enabled card that's reissued.

Visa made the decision to change its policy after the ABA's discussions with the company, said James Chessen, the ABA's chief economist.

"To Visa's credit they did their own deep-dive of reimbursement costs," Chessen said in an interview.

Visa's higher rates will be welcomed by financial institutions, particularly community banks, said Aite Group senior analyst Madeline Aufseeser. Banks have the headache of not only paying for the cost of issuing new cards, but also verifying that customers' recent spending history .

"The expense to issuing banks has just been huge," Aufseeser said in an interview. "It's the smallest banks that get hit the hardest."

MasterCard is likely to examine Visa's new repayment structure and may consider changing its own rates, Aufseeser said.

"I think it's a great move by Visa to show their continued support for their customers, the banks," she said. "Quite frankly I applaud Visa for taking this kind of step."

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