Wednesday, March 17, 2021
"Visa is committed to maintaining stability in our payments system and will not make any future rate changes in the U.S. for another year while the economy recovers," the company said in a statement to the Bloomberg news service.
"Mindful that some merchants are still facing unprecedented circumstances, we are delaying our previously announced interchange adjustments," Mastercard said in a statement to Bloomberg.
Visa and Mastercard adjust interchange rates once or twice a year—typically in April and October—increasing some rates while lowering others. But the two companies put off planned increases last year due to the economic uncertainties around Covid-19, and public pressure, which included a plea from Sen. Durbin and Representative Peter Welch, D-Vt.
Both Mastercard and Visa were planning to move ahead with adjustments effective next month. Many of the planned adjustments would make card acceptance more expensive for several categories of merchants, including restaurants, small grocers and ecommerce.
News of the planned rate hikes prompted Sen. Durbin and Rep. Welch to fire off letters to the two card brands, urging them to call off the hikes. Sen. Durbin, author of the Durbin Amendment to the 2010 Dodd-Frank law regulating debit card interchange, is chairman of the powerful Senate Judiciary Committee. He is also majority whip, which makes him the second most powerful Democrat in the Senate.
"Our nation is still reeling from the ongoing pandemic," Durbin and Welch wrote in their March 3 letters to Mastercard and Visa. "Raising your fees would undermine efforts to help the economy recover and further reduce Americans' purchasing power."
The card companies this week said okay, insisting in their statements to Bloomberg that they are doing their part to help businesses cope with economic hardships brought on by the pandemic. "Visa is proud of the role we have played in helping keep American businesses open during these extraordinary times," Visa wrote.
Mastercard stated that it "continues to support our merchant partners by enabling them to keep their businesses open with safe, secure and reliable payments for both in-store and online purchases."
James Shepherd, president of CCSales Pro and co-host of the Merchant Sales Podcast, praised the card company decisions. "Visa and Mastercard made the right decision here," he said. "I think they did our entire industry a favor by pushing the increases back by another year." Shepherd's statement, posted to LinkedIn, elicited agreement from scores of executives and sales agents from throughout the industry. "This would have been a humongous mistake given the economic landscape we are coming out of," wrote Steven Morris, managing partner at the Gatlic Group, a South Carolina-based merchant services provider.
Retailers, too, applauded the card company decisions to delay the planned interchange rate increases but argued that a temporary pause is not enough. Leslie Sarasin, president and CEO of the Food Marketing Institute said the card companies "made the right decision to call off these harmful and unwarranted fee hikes." Sarasin added that FMI "hopes Visa and Mastercard decide to make this postponement permanent."
Leon Buck, vice president at the National Retail Federation, said, "We're glad to see this delayed, but the increase should really be cancelled altogether. The only thing good about this increase is that it has focused the attention of Congress on the market power of Visa and Mastercard. We look forward to working with lawmakers as they address this issue this year."
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