Despite Regulation, Global Card Fees Continue to Grow and Threaten Merchants (Insights Magazine, July 2021)

02nd August 2021
Joshua Pynn
Joshua Pynn

CMSPI analysis suggests that overall fee changes scheduled for 2021 and 2022 could generate over $1.1 billion in additional annual costs for U.S. merchants.

Such news is not confined to North America – regardless of local competition, consumer preferences and regulation, merchants around the world are battling a rising tide of card acceptance fees. For retailers attempting to navigate numerous fee changes across their markets, it can be easy to see each increase in isolation, but a wider perspective is important. In this article, we take a historical and global view of the pattern, exploring how national regulatory approaches have interacted with fee increases to make payments acceptance costs more complex than ever.

Why Do Fee Changes Differ?

Multinational merchants know all too well that fees are increasing, and that each new or amended card fee announcement affects their markets differently. Part of the explanation for this lies with regulation. The merchant service charge (MSC), known as the merchant discount rate in the United States, is a per transaction fee paid by merchants to accept card transactions. The fee is composed of interchange, network fees, and acquirer margin. Of the three components that broadly make up the MSC, a common choice has been to regulate interchange, which is paid to the card-issuing bank and is typically the largest of the three fees. 

Regulation shapes the behavior of all actors within the payments supply chain. However, each jurisdiction legislates differently, and therefore when costs increase they do so in a way that is increasingly localized, channel-specific and difficult to reconcile. 

Want to read the full article? View July 2021’s edition of Insights Magazine below:

Insights Magazine from CMSPI | July 2021 Edition

You Might Also Be Interested In These...

Think Global, Act Local? The Challenges of International Payments for U.S. Merchants

The nuances of each country mean that U.S. merchants may be losing out by failing to localize their payments arrangements.

Read More >
The Good, the Bad, and the Ugly: Buy Now, Pay Later (Insights Magazine, July 2021)

Often considered an alternative to traditional credit, BNPL seems attractive on the surface, but adopting BNPL requires investigation on a case-by-case basis.

Read More >
Insights Magazine from CMSPI – July 2021 Edition Available Now

Our latest edition of Insights Magazine includes analysis of the challenges the payments industry and retailers alike face.

Read More >
The 6 Biggest Takeaways from the Federal Reserve Regulation ii Report

The 6 biggest takeaways from the Federal Reserve Regulation ii Report – CMSPI Insights

Read More >
Want to learn more? Read the entire article