How Do Interchange Rates Differ Between Visa and MasterCard?

Visa and MasterCard are two of the world’s top credit card networks. They offer a full assortment of credit cards with different rates, benefits, and functions. Your retailer can accept all of these Visa and MasterCard credit cards if you work with a merchant service provider who can produce a gateway for these cards.

You’ll be subject to interchange rates when accepting these payments. The credit card networks impose these interchange rates to cover the cost of processing a transaction. These rates will go to the banks that issue their cards, although the networks will also collect a small portion of these charges.

Visa and MasterCard both have interchange rates for their many cards. But they also charge different rates for various industries. Your business can review the rates it will likely pay to help you prepare for what you will spend on everything you manage.

What Programs Are There?

Visa and MasterCard both impose their interchange rates over various industries, with each having unique definitions for what works. MasterCard offers interchange rates based on general purchases, airline travel purchases, restaurant and supermarket deals, and utility payments. Visa has rates for supermarkets and restaurants, utilities, fuel, travel, and insurance payments.

Visa has more of these programs, meaning it has different rates for more industries. But the diversity that MasterCard has in its programs also deserves your attention.

Some industries will pay more than others. The restaurant and supermarket industries both have higher rates than what the fuel and utility industries will receive, for example.

General Rates

The average rates that Visa and MasterCard will charge are similar in most situations. An average credit transaction with Visa will cost 1.51% plus 10 cents. The rate for a MasterCard transaction will be 1.58% plus 10 cents.

The rates are similar for various industries, although the two card networks have different ideas for what they will charge. For Visa, a supermarket transaction can feature an interchange rate of 1.4% plus 5 cents. But MasterCard, that rate will be 1.48% plus 10 cents.

What About the Card Types?

Visa and MasterCard offer different cards with various benefits. Visa offers a Signature card that provides extended warranty protection, while the Infinite card offers return and purchase protection systems. Meanwhile, MasterCard has a World card that offers trip planning benefits and services, plus the World Elite card provides additional discounts on travel services.

The interchange rates for these two networks will be higher when there are more associated card benefits involved. While a supermarket transaction with a basic MasterCard credit card will have a rate of 1.48% plus 10 cents, a World Card will spend 1.58% plus 10 cents. A Visa Signature or Infinite card will also charge 1.5% plus 5 cents, which is 0.1% higher than what a base card can handle.

Any card that offers rewards or additional benefits will feature higher interchange rates. The costs will cover the expenses for managing these reward programs and providing these benefits to the customers.

Can They Experience Increases?

There’s always a chance that different credit card networks will increase their interchange rates. In 2020, MasterCard increased its charges for basic card transactions by 10 cents, putting their values on par with what the World card offers. The dues for many transactions were at 65 cents, but they went up to 75 cents in the process.

Sometimes the rates will increase for specific industries. In 2020, Visa imposed a 0.15% increase on the interchange rate for most commercial fuel purchases.

Card networks traditionally review their rates in April and November. Sometimes they will not change these rates, but others might adjust their rates to cover the costs of running their networks and issuing rewards.

While some of these increases are minimal, they can add up after a while. Some increases can become cost-prohibitive to where businesses will struggle to keep their cash flows intact. The 10-cent increase MasterCard made on its transactions results in a 15% increase in its rate, for example.

Rates Can Change By Country

The networks can also impose different rates based on the countries they serve. Visa and MasterCard use interregional rates for different transactions between various countries. In 2021, the two entries shifted their interchange rates for interregional CNP transactions between the United Kingdom and the European Union. The rates for credit card payments went from 0.3% to 1.5%.

What About Debit Cards?

Debit cards will have lower interchange fees than credit cards. A debit card will entail the customer paying for something with funds directly through a bank account. The risk of a debit transaction is lower, making it less expensive to process.

Visa charges 0.8% plus 15 cents for its debit transactions on average. MasterCard has an average debit rate of 1.05% plus 15 cents.

CNP Increases

Both networks also have higher rates for card-not-present or CNP transactions. These two networks will increase their rates by 0.3% to 0.5% when the card isn’t physically available. A CNP transaction has a higher risk rate, as it is hard to confirm if the person completing the transaction is the right person listed on a card.

Watch For the Merchant Fee

All the details listed here are independent of the merchant fee you would spend on each transaction. The merchant fee is a markup your merchant service provider will charge alongside the interchange fee. Be aware of the merchant fee you’ll spend when finding a service that can help you accept credit card payments. Be advised that while you can negotiate your merchant fee, you cannot do the same for the interchange rate.

Watch how the interchange rates with Visa and MasterCard work when looking at a plan for accepting credit cards. You can accept cards from these two networks, but the total you will spend on interchange fees will vary over your industry, the type of card you collect, and anything the networks determine. These totals will change, especially as the networks aim to keep their expenses for managing their cards under control.

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