Merchants to Pay Higher Interchange Fees for Visa Transactions

Visa Inc. is planning the biggest changes in a decade to the rates U.S. merchants pay to accept its cards. The company’s interchange rates — fees charged every time a consumer uses a card — will go up or down depending on the merchant and the way a consumer pays for their purchases, according to a document Visa sent to banks that outlines the changes. Higher rates are looming for transactions on e-commerce sites. Payment processors are updating their systems and readying merchants for the new rates, which will be rolled out in April and October, according to the document.

Total Retail's Take: Consumer adoption of rewards credit cards has increased, and so have the fees retailers and other merchants have to pay to process transactions made with such cards. Retailers spend more than $100 billion annually to accept electronic payments, a figure that’s grown in recent years as fees increase and consumers flock to premium cards, which carry higher interchange rates. However, there seems to be little that retailers can do to solve the problem. One option is to not accept Visa cards for payment to avoid the interchange fees, but that of course means turning away sales — and lots of them. That's not likely. The other, and more likely course of action, is that retailers voice their displeasure with the higher interchange fees, but have no choice but to accept Visa as a payment option. What inevitably is going to happen is that merchants will bake in the increased interchange fees into their product pricing, and consumers will ultimately end up footing the bill.