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ISOs and agents shouldn't be left out of the winner's
circle, Crone added, noting that it is up to each how
much of the basis point reduction gets passed along to
merchants. He sees ISOs as prospective buying groups,
suggesting they could create their own "buying groups"
and negotiate directly with the card brands for lower
interchange rates.

Not likely, said Smith. "They're not going to listen to
us," she said. Crone concedes PayPal and other large
payfacs are set to be the big winners when it comes to
buyers group negotiations.

Brand fees going up
While Mastercard and Visa are proposing to make
major concessions on interchange and rules, the card
brands aren't losing money, since interchange gets paid
to issuing banks. Besides, "they'll find other ways to
make money," Smith said.

In fact, no sooner was the ink dry on the proposed set-
tlement than news broke that Mastercard was hiking
its "acquirer brand volume fee" to 14 basis points (0.14
percent) from 13 basis points.
Based on 2023 volume—Mastercard said it handled
$2.591 trillion in transactions in 2023—that one basis-
point increase will add $259.1 million to Mastercard's
balance sheet.

The Merchants Payments Coalition, in a press release,
described the increase as "part of an unending pattern."
Mastercard and Visa, combined, have raised or created
new brand fees "at least 40 times since 2011 alone, ac-
cording to the MPC.

"This new increase proves the credit card companies
are continuing to take advantage of Main Street," said
Doug Kantor, general counsel for the National Asso-
ciation of Grocery Stores. "They made a show of 'set-
tling' legal claims, but nothing in the settlement limits
the fees that go directly to Visa and Mastercard." Kan-
tor also put in a plug for passage of the Credit Card
Competition Act, stating it would establish "fair mar-
ket competition." That legislation, authored by Senator
Dick Durbin, would ostensibly allow merchants to pro-
cess Visa and Mastercard payments across less expen-
sive third-party networks, such as Pulse.

Merchants aren't the only parties getting hit with price
hikes; ISOs, too, are paying more. Smith explained
how one fee Superior pays to Mastercard—a settlement
advisement fee—has been ratcheted up from $300 per
month per BIN to $1,000 a month per BIN.

Patti Murphy, self-described payments maven of the fourth estate,
is senior editor at the Green Sheet. She also co-hosts the Merchant
Sales Podcast, and is president of ProScribes Ink. You can reach her
at patti@proscribes.net.

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