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Card Networks To Postpone Interchange Adjustments

The payment card networks plan to postpone until July changes in their interchange schedules that they had planned to take effect in April, Digital Transactions News has learned.

The delays come as many merchants, especially restaurants, hotels, and local retailers have closed or greatly reduced their operations as part of governmental attempts to control the spread of the coronavirus, or Covid-19. Some independent sales organizations and other groups have called on the networks to cancel the April interchange updates, saying merchants do not need an increase in the price of accepting cards in such a distressed environment.

A source at a Midwestern ISO told Digital Transactions News late Friday morning it has received “official notice” that Visa Inc., Mastercard Inc., and American Express Co. are delaying planned April changes in their pricing schedules. Discover Financial Services also confirmed a three-month postponement.

A Visa spokesperson, however, said Thursday night that the company is considering its options, but would not publicly confirm a delay. “Visa is committed to partnering with our clients during this difficult time,” the spokesperson says by email. “We are actively implementing and considering a number of ways we can proactively support our clients to ensure the stability, security, reliability and resiliency of the digital payments ecosystem.”

Mastercard is postponing some network upgrades that it had planned, but a source familiar with its plans says they include a delay until July in interchange adjustments. In a statement issued to Digital Transactions News Friday morning, however, the company would only discuss operational issues.

“To help our customers and partners manage through this unprecedented event, we are pausing updates to some systems while delivering the same level of security and service they receive every day,” the statement says. “This is one way we can help them focus on their core systems operations and resiliency efforts to meet the needs of consumers and business.”

A spokesperson for Riverwoods, Ill.-based Discover says in an email message that “Discover recognizes that many organizations are facing operational challenges, with the majority of business operating remotely. Therefore, we have made the decision to postpone our spring release, 20.1, from April 17, 2020 to July 17, 2020 in order to support our clients and their customers.” An AmEx spokesperson could not be reached for comment.

Digital Transactions News has not seen the final pricing schedules the networks had planned for April. But a draft document from late 2019 listing Visa’s proposed credit card rates includes a number of increases as well as decreases in certain rates for some merchants, depending on card type. But restaurants look like they’re in for an increase. The current schedule from April 2019 lists five credit card rates specifically for restaurants ranging from 1.54% of the sale plus 10 cents to 2.40% plus a dime. The draft schedule lists restaurant credit rates ranging from 2.10% plus a minimum of 4 cents to 2.70% and a minimum of 8 cents.

“We appreciate the collaboration with payments-system stakeholders during this time of crisis and the recognition that networks making changes right now would not have a positive impact in the market,” a spokesperson for the Merchant Advisory Group, a Minneapolis-based association of retailers concerned with payments issues, tells Digital Transactions News by email. “By delaying the changes, we believe the decision will add to the stability of the system during this critical time as well as defer pricing increases some of the most affected merchants were going to incur.”

The MAG also says it is working with retailers and others in the payments industry to again request that the networks delay their planned October 2020 EMV liability shifts for card-accepting fuel pumps. The networks have already denied an earlier request for a delay, which originally they had set for October 2017. The shift will make convenience stores and other gasoline retailers financially responsible for counterfeit fraud originating at their fuel pumps if a pump can’t read an EMV chip card. 

Fuel retailers, however, say the cost and complexity of the upgrades is still plaguing them. “There are many complications with hardware installation, software deployment, and testing and certification through no fault of the merchants,” the MAG spokesperson says. Issues include “eliminating signature requirements for fleet cards; chargeback mitigation and fraud prevention; and educating merchants about best practices for cleaning PIN pads, among other items.”

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