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The Green SheetGreen Sheet

Thursday, March 19, 2009

New fees, more money for Visa, MasterCard

MasterCard Worldwide and Visa Inc. are revising fee schedules, upping the ante for merchant acquirers. MasterCard recently unveiled a new Network Access and Brand Usage (NABU) fee of $0.0185 per transaction to be assessed acquirers beginning in April 2009. Visa will levy a new U.S. Acquirer Processing Fee (APF) of $0.0195 per transaction three months later.

Unlike interchange, which benefits bankcard issuers, these new fees will flow directly to MasterCard and Visa. It's a move that should pay off handsomely for the two companies' shareholders. Adil Moussa, a Senior Analyst with Aite Group, estimates MasterCard, alone, will boost per-transaction revenues by more than 300 percent, from $42 million to $152 million in one year.

"This is a direct result of MasterCard and Visa going public," Moussa said, adding that he expects more new fees in future years. "They have to make their shareholders happy."

In the details

The NABU fee of $0.0185 will be billed by MasterCard for "each acquired financial detail" record, according to ISOs and merchant level salespeople (MLSs) who have received notice of the fees.

The fee is based solely on clearing records; it does not apply to authorizations that don't get settled, addendums, manual cash advances, chargebacks, reversals and other special situation categories. It takes the place of the Acquirer Access Fee MasterCard has been billing as a pass-through cost of $0.005 per authorization.

Only transactions involving both U.S. merchants and U.S. cardholders are subject to the new MasterCard fee.

Meanwhile, Visa will begin assessing its APF of $0.0195 on July 1. It will be assessed per authorization acquired in the United States, regardless of where the issuers or cardholders are based. Also covered are Visa POS Check and Visa ReadyLink authorizations. The AFP does not apply to Zero Verification Messages or Authorization Reversals.

Visa also said it will eliminate the VIP Variable Access Fee now imposed on all Visa transactions, according to those who have received notice of the plan.

On the merchants

Both MasterCard and Visa also revealed new interchange rates. A document detailing MasterCard's fee schedule, available on its Web site (www.mastercard.com/us/merchant/support/interchange_rates.html ), takes up 115 pages.

Visa interchange adjustments include extending the Small Ticket Interchange Rate to Service Stations for transactions of $15.00 or less. More information is on Visa's Web site, www.corporate.visa.com/md/in/main.jsp .

MLSs and merchant representatives The Green Sheet spoke with said they expect MasterCard's and Visa's new fees will ultimately hit merchants hard.

Jennifer Hatcher, Group Vice President for Government Relations with the Food Marketing Institute, said preliminary estimates indicate the two new charges, combined, could raise a supermarket's operating costs by as much as $3,000 per store per year. "It would take $300,000 in grocery sales just to pay that fee increase for one year," she said.

We solicited comments about the new MasterCard fee on GS Online's MLS Forum and found few agents eager to pass on new fees to clients. "It is starting to look like the card companies think the merchants are a bottomless well to draw from," read a comment from The Dustman. end of article

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