‘Visa’s New Program Vexes Merchants’
Well, what do you know? It turns out that Visa has a “revamped system” that “has socked some merchants with higher costs.”
The credit card companies keep telling Congress they don’t raise fees but in October Visa came out with a “Commercial Enhanced Data Program” that forced merchants into “a new interchange level” and made them “pay higher fees.”
Visa’s change hit small and mid-size merchants the hardest, with a consultant to those businesses saying the majority of them are “struggling.” The consultant noted that even:
- “Some of our largest clients that do billions of dollars a year in processing revenue fell short.”
- “They’re in panic mode right now.”
Visa demands that merchants give it more private data about transactions — and punishes retailers that can’t or won’t provide as much data. Smaller retailers simply do not have the same capacity as large retailers to meet Visa’s data demands.
Make no mistake — requiring more data is one of the primary ways that Visa and Mastercard have systematically made smaller retailers pay higher fees for many years.
The October change simply makes Visa’s longstanding unfairness to small businesses worse.
Not only that, but Visa has been difficult in the secretive way they’ve made this change.
- The consultant “largely blames Visa for poor communication about the new program and merchants missing their discount targets in the weeks since the new program went into effect, he said. The network has been ‘tight-lipped’ about the change, forcing his firm to wait for answers to many questions over the past six months.”
- And, he said, “The fact that some of these big clients that we have are already losing hundreds of thousands of dollars tells you that Visa is not messing around here.”
And Visa is using AI to monitor all this, which is making mistakes in hitting some merchants with higher fees.
- “Most transactions, most merchants – suppliers – are essentially being treated as guilty until proven innocent,” according to the consultant.
The bottom line — Visa hit merchants with higher fees in October and small- and medium-sized businesses were hit the hardest.
The more things change, the more they stay the same.
COMPETITION IS BETTER FOR EVERYONE
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