Visa Stalls Plans to Raise Fees for Some In-Store Retailers

Visa Inc. is delaying plans to raise the swipe fees paid by certain U.S. merchants each time a customer uses a credit card in-store as the coronavirus pandemic continues to crimp commerce across the country.

The network told merchants this month it will leave consumer credit card-present retail rates unchanged, citing the pandemic’s effects on in-store shopping, according to a document seen by Bloomberg. A spokesman for Visa declined to comment.

Visa had planned to make the biggest changes to swipe fees in a decade this year, with higher rates planned for transactions on e-commerce sites. Some retailers, such as those in real estate or education, were set to see such fees decline.

The network opted to delay the changes as the pandemic took hold across the U.S., forcing consumers to stay inside and crimping transactions on the firm’s network. The planned changes will now happen in April 2021.

“Given the unprecedented impact of the Covid-19 pandemic on the U.S. economy, Visa determined it would not make any structural changes to the payments ecosystem over the last year,” the network said in the document.

Tokenization Push

In the initial proposed changes, Visa said the interchange rate for so-called card-not-present transactions, which include those made online or over the phone, will increase. For a traditional Visa card, the fee on a $100 transaction will climb to $1.99 from $1.90. For premium Visa cards, the fee will rise to $2.60 from $2.50.

While those rates are still set to go into effect in April, the network said it will offer a lower rate for merchants who elect to tokenize those transactions using a Visa EMV payment token, starting in October.

Visa, along withMastercard Inc., has spent years promoting tokenization technology. The service was designed to reduce online card fraud and help issuers approve more transactions by swapping sensitive information such as account numbers with a unique one-time use set of numbers that validates a customer’s identity.

Still, there’s been resistance to the technology. Merchants have complained that they’ve lost the ability to route certain debit-card transactions over alternative, cheaper networks for online and mobile-wallet transactions that use tokenization.

“Incentivizing greater use of tokens will improve e-commerce authorization rates and bolster security at a time when fraudsters are increasingly targeting digital and e-commerce channels,” Visa said in its message.

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