Nowadays, debit cards and credit cards are gaining popularity in various parts of the world because they provide methods to make contactless and cashless payments. Most banks issue MasterCard and Visa cards for their customers to ensure smooth transactions. However, they should know how to utilize them properly while buying goods or services online or offline that will help them get peace of mind.
What are interchange fees?
A merchant should learn what is an interchange rate before processing the debit card and credit card payments. Interchange fees are transaction fees collected from a merchant store when customers use debit/credit cards for purchase. Although a card network is responsible for collecting the amount, it will repay the same to the respective banks that issued the card to customers. A merchant has to pay a percentage of the fee on every transaction when customers utilize their credit card or debit card. Merchants have to pay interchange fees while accepting credit card or debit card payments from customers.
What are the factors that affect interchange fees?
Some factors will influence the interchange fees and merchants need to understand them in detail. They include the card type, business size, industry, and transaction type that helps to run a business with ease. Debit cards with PINs usually have lower interchange fees when compared to credit cards. On the other hand, credit cards that are having high-end rewards carry high interchange fees than non-rewards variants.
Knowing more about Visa & MasterCard interchange fees
Interchange fees for Visa & MasterCard vary based on the different types of transactions and merchants should aware of them properly. For example, the interchange fees charged for Visa basic credit involves 1.51%+ $0.10 for swiped or dipped transaction. Similarly, interchange fees for keyed / e-commerce transactions include 1.80 %+ $ 0.10. Interchange fees for basic MasterCard credit cards involve 1.580 % +$0.10 for swiped transactions and 1.890% + $0.10 for keyed transactions. Merchants can know the details of interchange fees for other cards online which helps to gain more ideas.
Updates on Visa and MasterCard interchange fees 2021
MasterCard Company announced that it will increase the interchange fees from 22nd January 2021for contactless payments. As per the announcement, merchants have to pay 1.25 extra for business cards and 1.50 % extra for corporate cards in the European region. Therefore, they should check with the respective banks to know the changes immediately.
However, Visa Company said that it will increase interchange fees from April 24, 2021, in European countries. It is likely to increase interchange fees for commercial immediate debit cards by 0.55% to 0.90%. Merchants will have to pay 0.10 % extra on electronic commercial transactions done by consumers. In the same way, interchange fees for standard transactions may go up to 0.05 % when customers utilize the commercial business card. The company will also increase intra-regional transactions and merchants should aware of them correctly. Any merchant who wants to run the business successfully in the markets should know the changes in interchange fees that will help accomplish goals to a large extent.