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April 25, 2022 • Issue 22:04:02

Interchange adjustments

are a mixed bag

"I have a front row seat, and I definitely saw changes last
fall," said James Shepherd, CEO of ISO Amp, a leading
statement analysis tool. His analyses revealed "some
reductions in card-present interchange rates and some
increases in card-not-present rates."

Some of the biggest changes were in the way transactions
are categorized, especially for restaurants, said Kyle
Morgan, CEO at MPI Processing. "Essentially, almost all
cards are now downgrading to Restaurant 2 interchange
whereas it used to be that 80 percent were Restaurant 1,"
Morgan said. "So, while the actual interchange on these
two categories did not change, the effective rate for these
merchants increased due to qualifications."

The merchant consultancy CMSPI estimated that Visa's
2021 changes worked out to $697 million in additional
By Patti Murphy interchange fees last year. Visa's latest round of increases
will impose an additional $145 million in fees, the
ollowing what was publicly portrayed as a two- consultancy said.
year hiatus, Mastercard and Visa adjusted inter-
change pricing effective this month. The new The changes that took hold this month primarily affect
F rates, both higher and lower, take effect amid consumer credit card transactions, with the bulk of
renewed interest in Washington over the inner workings of increases borne by larger merchants accepting premium
the leading card networks. cards.

Rohit Chopra, director of the Consumer Financial Protection Visa interchange on card-not-present transactions is
Bureau, said publicly that he's troubled by the rate hikes increasing by between nine and 10 basis points; non-
and hinted that federal regulators and antitrust lawyers qualified (downgraded) transaction fees are up 45 basis
may take a closer look at how the card brands set rates. points, according to a CMSPI analysis.

And in a related development, several states want to
outlaw interchange assessments on the tax portion of card
transactions. Contributed articles inside by:
Hikes range from 6 bp to 45 bp Natasa Cvijanovic .................................................................................28
Ken Musante ..........................................................................................32
Visa and Mastercard typically revise interchange tables
twice a year—in April and October. But both companies Elie Y. Katz ...............................................................................................34
shelved planned rate hikes in 2020 and 2021, citing business
disruptions brought on by the COVID-19 pandemic. But TOC on page 3
they did make adjustments.

Continued on page 26