| Oftentimes,
annual fee adjustments by Visa/MasterCard include
reductions in some card transaction categories.
And, while many merchant acquirers and their middlemen
eagerly pass fee increases along to merchants,
most don’t pass reductions onto small and
mid-sized merchants.
In 2003, for example, Visa/MasterCard
settled the Wal-Mart class action suit which called
for hundreds of millions of dollars of fee reductions.
All of the large merchants received their share.
Most small and mid-sized businesses did not because
of a loophole in the settlement agreement that
allowed merchant acquirers and their middlemen
to keep them.
Likewise, Visa/MasterCard often
grant incentive programs for certain card types
and categories of merchants – such as small-ticket
merchants. Say a restaurant has an average ticket
of $40. There is one pre-set interchange rate
for all swiped transactions that fall within the
normal range of that average ticket. But, if the
ticket drops below $15, Visa issues a fee reduction
of about $.05. Yet, few merchant acquirers pass
this fee reduction directly onto the restaurateur.
Fee reductions and incentive programs
can significantly impact the profitability of
small and mid-sized merchants – just like
increases can. It is not fair to pay for the increases
while being excluded from the decreases and incentives.
It starts with awareness … and then insisting
merchant acquirers pass the savings on.
Small and mid-sized
merchants have the right to know about these incentives
and fee reductions.
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