One week after Mastercard offered to temper the fees restaurants and retailers pay per credit card transaction, a group representing those merchants says it’s learned the financial giant intends to raise another charge it levies on business partners.
According to the Merchants Payments Coalition, the credit card company is planning to increase what is known as an assessment fee to 0.14% as of April 15, an increase of one one-hundredth of a point. The higher charge would apply to both credit and debit payments made with a Mastercard, the Coalition said.
Assessment fees are the monthly charges that go wholly to the companies that own credit card brands. The fees are levied on businesses in exchange for being granted the privilege of accepting a card.
They differ from interchange charges or what are popularly known as swipe fees, the per-transaction amounts restaurants and retailers pay to cover the cost of processing a credit-card payment. Those dollars go to the banks or financial institutions that issue their own version of a Mastercard or Visa card.
A lawsuit settlement jointly proposed by Mastercard and Visa last week focused on swipe fees. In exchange for the Coalition and other plaintiffs dropping litigation that has been in the court system for 20 years, the card companies would temporarily reduce swipe fees and freeze the new rates for several years.
Although the assessment-fee increase uncovered by the Coalition would be slight, it would add up to an additional $250 million in expenses for restaurants, c-stores and other merchants that accept payment via a Mastercard, the merchants’ group said.
“They made a show of ‘settling’ legal claims, but nothing in the settlement limits the fees that go directly to Visa and Mastercard,” Doug Kantor, general counsel of the National Association of Convention Stores (NACS) and a member of the Coalition’s executive committee, said in a statement. “That leaves them free to continue to increase these fees and they are doing it already.”
A Mastercard spokesperson acknowledged that several pricing changes will go into effect later this month for banks that issue the company’s cards and collect money from merchants, but stressed the new charges have nothing to do with swipe fees. He added that associated banks were informed of the pending changes in assessment fees last year.
According to the spokesperson, the additional revenues will go toward “delivering value and strengthening security for banks, business owners and consumers.”
“We all have a responsibility to invest in the security of consumers and merchants and for that reason, we hope merchant service providers do not pass these changes to their customers – the business owners,” the spokesperson said.
The settlement proposal issued last week by Mastercard and Visa has yet to be approved by the federal court adjudicating the two-decades-old legal effort to force a reduction in what restaurants and retailers pay for credit card transactions.
The offer was met with a lukewarm response from merchants and their advocates, including the National Restaurant Association. Sean Kennedy, the association’s EVP of public affairs, called it “a small reprieve, but wholly inadequate for restaurants suffering with record-breaking swipe fees.”
He went on to say, “This temporary discount won’t have a lasting or significant impact on costs. When you’re spreading out a settlement–even one this big–equally among millions of business owners over a few years, there will be a negligible impact on the costs restaurant operators pay to accept credit cards.”
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