Visa Revamps Pricing to Prod Merchants for Volume Posted by AVCU on 12:47 PM

American Banker reports that VISA is overhauling pricing to encourage merchants to route transactions its way in order to protect its dominant share of the U.S. debit card market. The network plans to lower an existing variable fee that merchants and their acquirers pay on each card transaction. But, Visa will also introduce a fixed "network participation" fee that merchants will pay to accept any of the network's cards, debit or otherwise.

VISA representatives wouldn't disclose details about how the fee changes will work, but it's clear the move is an effort by VISA to protect its market dominance in the face of Durbin interchange amendment impact.

The new Federal Reserve interchange limits mandated  by the Durbin amendment give merchants greater ability to control processing of debit card transactions. The arrangements that Visa and others have with banks under which it exclusively processes both an issuer's signature and PIN debit transactions. Visa is expected to lose a substantial portion of its PIN debit volume as a result, as issuers add networks to replace or accompany Visa's Interlink PIN network.


The fixed annual network fee will be paid by retailers to merchant acquirers, who will pass them on to Visa in monthly installments. The fixed annual fee schedule is expected to be complex based on merchant size, number of outlets and category.  Merchant processors could mark up the cost of the network participation fee charged to merchants to boost their own profit margins.


Read the entire American Banker article here.