Each of the four major U.S. card brands is waiving interchange fees on Haitian relief donations made to select charities for a limited time to ensure a greater portion of contributions made with their cards reaches victims of the massive earthquake that struck the region Jan 12.
MasterCard Worldwide, Visa Inc. and Discover Financial Services are waiving fees for select organizations through February, while American Express Co. is rebating the merchant discount rate for contributions made with AmEx cards retroactively from Jan. 12 through February, according to the companies.
“We believe that rebating the discount rate is an important way to help those who need it most,” an AmEx spokesperson tells PaymentsSource.
The amount AmEx will rebate will depend on how much cardholders donate, though in similar situations the total has ranged from $40 million to more than $100 million, depending on the crisis, according to the spokesperson, noting AmEx’s most recent reported average discount rate was 2.54% of the transaction amount.
Visa, MasterCard and Discover declined to estimate the total fees they will
waive from transactions initiated with their cards.
“It’s a card-not-present transaction, so depending on whether it’s a debit card or credit card, you have to figure 1.7% to 2% roughly, give or take 10 basis points,” says Allen Weinberg, a managing partner at Glenbrook Partners LLC, a Menlo Park, Calif.-based consulting and research firm.
Because Visa and MasterCard do not receive interchange funds from merchants, “this is coming out of issuers’ pockets,” he notes. “It’s nice [the brands] did it, but it’s really the issuers who are implicitly making the donation.”
Besides waiving or rebating fees, however, each brand is making a charitable contribution and is matching employee donations to the relief efforts.
Visa donated $200,000 to the American Red Cross Haitian Relief and Development Fund. It also is matching employee donations to Haitian relief efforts on a two-to-one basis through January. Visa is waiving interchange fees for donations made with its cards to the American Red Cross, AmeriCares, Cares USA, Direct Relief International, Habitat for Humanity, International Rescue Committee, Mercy Corps, Oxfam America, Save the Children, US Fund for UNICEF and World Vision.
MasterCard also made a corporate donation to the American Red Cross but did not say how much. It also will double-match employee contributions to the American Red Cross. MasterCard is waiving interchange fees for donations made with its U.S.-issued cards to the American Red Cross, AmeriCares, UNICEF, Save the Children and CARE USA. It also is waiving fees on donations made using Canadian-issued MasterCards to the Canadian Red Cross, Doctors Without Boards, UNICEF Canada and World Vision.
AmEx donated $250,000 to the American Red Cross, Doctors Without Borders, the International Rescue Committee and the United Nations’ Friends of the World Food Program. It is matching employee donations up to $8,000 per employee for relief efforts, and it is rebating the merchant discount rate for contributions made directly to any of the nonprofit organizations listed on the U.S. Agency for International Development’s Web site in support of Haiti relief.
Discover donated $100,000 to the American Red Cross and pledged up to $1 million more through a cardmember matching program, according to the company. Under the program, which began today, Discover will match donations made by members of its Cashback Bonus program up to $1 million. Discover also is waiving transaction fees on credit card donations to the American Red Cross and is matching employee donations.
