- Interchange is set in a highly competitive and dynamic environment.
- There is a cost to accept Visa cards, just as there is a cost to accept cash, cheques and other forms of payment. For example, it takes time to count and deposit cash, and cash may disappear as a result of errors or theft. Cheques can be delinquent or cause losses to retailers because of a lack of funds in the cheque writer's account. The cost to accept electronic payments may be more apparent to retailers, however, because they are directly billed for the service.
- Interchange is consistently monitored and adjusted – sometimes increased and sometimes decreased – in order to assure the economics and value of the transaction are balanced for all parties. Such adjustments enable Visa to expand the types of payments consumers can make with their cards, including payments for small-ticket items, rent, utilities and even mass transit.
- Retailers and consumers do not pay interchange. Retailers pay what is known as a Merchant Discount or Merchant Service fee, which is negotiated with their financial institution and may include interchange; the cost of transaction processing, terminal rental and customer service; and the acquirer's or processor's margin, among other costs. So imposing price caps on interchange would not necessarily lower a retailer's costs for card processing.
- Visa sets interchange in a manner that balances the value and economics among all parties that participate in the Visa network – retailers, financial institutions and cardholders. If interchange is too low, then cardholders' financial institutions won't issue cards; if interchange is too high, retailers won't accept them.
- Retailers have options for lowering their costs if they genuinely believe that their card acceptance costs are too high. They can provide discounts to those who pay with cash, or choose to accept only cash or cheques. Or, retailers can shop around among competing financial institutions for the best prices offered by them.
Visa's Position on Interchange
Interchange plays a critical role in nearly every Visa transaction and the system at large. And it is also an issue that has been debated in courtrooms and regulatory arenas from time to time. Currently, retail trade associations in some parts of the world are lobbying to establish price controls on interchange, either through regulation or litigation.
Visa believes that any inappropriate intervention into interchange, if successful, would result in fewer payment choices and a reduction in benefits for both consumers and retailers, and possibly even higher check-out costs. While we respect any business's right to lower its costs, we continue to believe that interchange is the most effective mechanism for managing a global network that includes thousands of financial institutions, millions of retailers and millions of cardholders.
Retailers have options when it comes to the payments they accept. They can also provide discounts to those who pay with cash or cheque, choose to accept only cash or cheques, or shop around for the best prices.