April 2022 Card Network Fee Changes

Businesses accepting card payments should prepare for extensive changes in Credit and Debit Card Interchange Rates and Card Network Fees coming in April 2022. Many changes were announced by Visa, MasterCard, American Express, and Discover covering most industry segments. BlackLine Advisory Group (“BlackLine”), a payments business consulting organization, has been working with clients to review the impact of these network cost changes and has compiled a summary of the changes to allow businesses to review the impact.

Although most of the changes result in higher interchange costs, there is a reduction in costs by Visa for Small Merchants. Small merchants, those with less than $250,000 in volume for a tax ID between October 1, 2020 and September 30, 2021, will generally see a reduction in Interchange Rates. The reductions impact Card Not Present and Card Present transactions depending on the industry segments defined in the program. These reductions are good for small merchants qualifying for the new Small Merchant program.

Most other merchants not falling into the Small Merchant program will face higher card payment acceptance costs due to these changes. The annual industry expense impact is estimated to be at least $3+ billion. Based on our early analyses for clients, businesses above the $250,000 Small Merchant threshold could encounter cost increases from .03% to .25% of their card volume, depending on industry classification and mix of payment cards being used by their customers. While this rate may not seem significant, it is one of the largest overall cost increases in the last 10 years. For example, a business with $1 million in card payments would incur cost increases of $3,000-$25,000+ per year.

Given the effects on the economy and operating costs from COVID-19 and recent world events, BlackLine recommends businesses assess the effect of these rate changes carefully. With inflationary cost pressures impacting margins, the impact of these card acceptance costs should be taken into consideration when reviewing client pricing.

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