Visa Increases Interchange Rates
Visa USA announced July 30 that it will be raising interchange rates for acquirer members by an average of 5 to 6 percent. The increase, the first in interchange rates since 1991, will go into effect April 1, 1998.
"Visa has succeeded in keeping system-wide interchange rates relatively steady for the last seven years, while continuing to improve the system and services for all its partners," said Ron Schmidt, Visa's Executive Vice President for Membership and Statistics.
According to Visa, the rate increase is due to the escalating operating costs to issue consumer and commercial cards, as well as costs related to continued system investments to improve payment procedures. Specifically, Visa issuing members have incurred expenses related to the increased demand for cardholder services, improving risk protection systems, and developing product enhancements to meet individualized needs of merchants and customers.
The increase applies to the company's consumer and commercial cards but not to the debit rates for the Visa check card.
Visa's Board of Directors also approved reductions to issuer and acquirer fees related to secure transactions over the Internet that use Visa's Secure Electronic Transaction (SET) protocol.
According to Visa, the company does not fear a backlash. "It is these types of investments in Visa's products and payment system which have made it the overwhelmingly preferred card brand, a critical component to the success of both Visa's issuing and acquiring member's card programs. Because Visa has foregone material increases in interchange rates for seven years, these rate modifications will continue to position Visa competitively in the marketplace and will enhance the Visa brand as the world's leader in consumer payment systems."
