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Visa and MasterCard Raise Rates on International Cards

 

New Foreign Credit Card Assessments - How They Affect Your Property

 

Each April and October the Visa and MasterCard associations release their newest version of interchange (interchange is a fee charged by M/C and Visa per transaction and awarded to the Issuing Bank), and merchants are expected to accept these changes.   If you accept Visa and MasterCard, it is simply part of doing business. 

 

What Happened - In April 2008, something unique occurred as Visa and MasterCard found a different way to raise rates.  Instead of increasing interchange (remember interchange goes in its entirety to the card issuing bank), Visa and MasterCard increased assessments (assessments are paid directly to the Visa and MasterCard associations, which are now public companies).   Visa instituted a 0.40% premium on all foreign (card issued outside of the United States) transactions occurring in the United States and MasterCard likewise instituted a 0.30% premium on the same.   These additional assessments are over and above the standard assessments paid to these same Visa and MasterCard associations and have consistently been priced at approximately 0.10%, or 10 basis points. 

 

The Result - Merchants across many sectors were greatly affected in major metropolitan cities such as San Francisco, New York, Seattle, Phoenix, LA, and all other areas that cater to the foreign market.    

 

What You Can Do - Monitor the impact of these foreign cards on your business by examining your monthly statements and tracking their impact on your marketing and organization efforts.  Though there is nothing the merchant can do to eliminate these assessments, they can use this information to more correctly budget their expenses and therefore control their profit margins.  The entire Visa USA Operating Regulations can be found at  http://usa.visa.com/download/merchants/visa-usa-operating-regulations.pdf