One of the critical changes companies should be aware of is that credit card networks are looking at changes in their interchange schedules until July. These changes were initially planned to take effect in April, so this can have an impact on many businesses.
COVID-19 has caused many delays for merchants. Restaurants, hotels and local retailers have closed and/or greatly reduced their operations in large numbers as governments try to control the spread of the virus all around the world. This is affecting commerce on multiple levels. The coronavirus has caused sales organizations, in addition to many other groups, to cancel interchange updates that were going to go into effect.
The coronavirus has caused sales organizations, in addition to many other groups, to cancel interchange updates that were going to go into effect.
With a lot of volatility in businesses and markets, the environment is not one where all merchants can manage the increase in price. Sources have stated that Visa and MasterCard, as well as American Express, are delaying the planned changes to the pricing schedules. Also, Discover Financial Services confirmed a three-month postponement to some changes it was planning to implement.
Some credit card companies, however, are saying that they are still considering their options. The word coming out of Visa via email is that they are “committed to partnering with our clients during this difficult time” and their spokesperson added, “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 also put out a statement, saying, “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.” It continued, “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.”
With so many changes coming within the payments ecosystem in the time ahead, we strive to remain operational and reachable during these trying times, as interchange delays and other issues arise.
An initial draft document from late 2019 detailed Visa’s proposed credit card rates and included a number of increases, as well as some decreases, in certain types of rates for certain types of merchants. These changes sometimes depended on the card type. Restaurants looked to be getting an increase; the current 2019 schedule has interest rates for restaurants that range from 1.54% to 2.4% plus $0.10.
The draft schedule lists the credit card rates ranging from 2.1% to 2.4% plus a minimum of between four and eight cents. This increase, coming at a time when many restaurants have been temporarily closing their doors, would cause further hardship for this industry when doors were to open back up.
Other industries would also be affected by changes to the schedule if changes were not delayed, adding additional instability to affected industries during this critical period. By postponing some of the price increases to affected merchants, a more stable payment processing ecosystem can exist.
Those impacted by payment processing issues, such as retailers, have been asking networks to delay EMV liability shifts that were planned for October 2020 as well. These liability shifts were targeted at card-accepting fuel pumps; they would increase the financial responsibility of convenience stores and other retailers selling gasoline in terms of counterfeit fraud that could originate at their fuel pumps, particularly if a pump cannot read an EMV chip card. The cost and complexity of these upgrades have been said by fuel retailers to provide additional complications in terms of software, hardware, testing and certification.
Overall, at the moment, interchange adjustments may be postponed until July, but the content of many of the changes will stay the same. And while credit card companies have said they will invest in support for clients to help ensure that people can make the stated adjustments for July, it’s more vital than ever for adult industry merchants to stay in touch with payment processors who understand their unique needs.
Jonathan Corona has 15 years of experience in the electronic payments industry. As MobiusPay’s EVP, Corona is primarily responsible for day-to-day operations as well as reviewing and advising merchants on a multitude of compliance standards set forth by the card associations. MobiusPay specializes in merchant accounts in the U.S., EU and Asia. Follow them @MobiusPay on Twitter, Facebook and IG.