Visa Commits to a Two-Tier Debit Card Interchange Structure

by Mercator Advisory Group 0

In my blog last week, Dual Interchange-Visa Blinks, I discussed how this announcement came in response to the Fed’s punt to the networks on small issuer exemptions of interchange fee regulations. As the largest debit brand in the credit union market, Visa was under pressure to take a position, even one with plenty of hedges in it. In this case, MasterCard holds a second-place advantage and can afford to wait a bit before they jump in the fray.

Wild cards remain in the deck, however. MasterCard, a distant second to Visa in debit, hasn’t made a decision about its debit interchange yet. In a statement, MasterCard seemed to take a swipe at Visa for endorsing a two-tier structure before the Fed releases its final rules. “MasterCard is continuing to evaluate the viability of a two-tier interchange structure for debit and excluded products,” the statement says. “We will be thoughtful and comprehensive in our analysis of this issue. We believe it is not prudent to make such a decision in advance of knowing all the facts. As we have done for over 40 years, MasterCard is committed to maintaining a competitive interchange structure that appropriately balances the payments ecosystem, and we plan to continue doing that going forward.”

Now that the cat is out of the bag, so to speak, Visa will have to move fast to communicate how they plan to support a dual interchange schedule once the rules are announced.

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