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From Visa and Mastercard adjust interchange rates and introduce new domestic fees

How could Mastercard's expansion of new domestic transaction fees affect businesses?

Likely What happens if… A possibility worth considering, not a forecast.

Mastercard expands new 1.8-cent fee on domestic transactions Mastercard is expanding a new 1.8-cent USD fee to cover all transactions starting this week. This fee is initially charged to card processors but is routinely passed on to small merchants. This move comes as Visa plans to levy the exact same 1.8-cent fee starting in April 2027. The fee expansion occurs while Visa is simultaneously expanding its small merchant interchange rate to firms with up to $750,000 in annual Visa sales.

Reported by 1 independent outlet Written Oct 14
Effect
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How it reaches Mastercard

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The facts so far

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  • Mastercard is expanding a new 1.8-cent USD fee to all transactions starting this week.aol.com
  • Visa intends to levy the exact same 1.8-cent fee starting in April 2027.aol.com
  • Visa is expanding its small merchant interchange rate to firms with up to $750,000 in annual Visa sales.aol.com
  • These fees are first charged to card processors but are routinely passed on to small merchants.aol.com

Why it matters

The fee expansion directly impacts the operational costs for small businesses that rely on payment networks. While Visa is expanding its lower-rate program to include more businesses, Mastercard's expansion of the 1.8-cent fee represents an increase in the payment processing costs that merchants will likely absorb.

This development occurs amid a broader push by the Canadian Federation of Independent Business to ensure that cost savings from lower interchange rates are fully passed on to merchants. CFIB is actively putting pressure on the government and payments industry to review size thresholds and expand lower small business rates to additional card providers.

What we don't know yet

  • Will Mastercard adjust its small merchant program to offset the new 1.8-cent fee?
  • How will the new fee structure affect the competitiveness of small businesses against larger chains?

What would change this answer

Mastercard lowers its small merchant threshold or reduces existing feesThe negative impact of the new 1.8-cent fee on small businesses would be mitigated.
Visa and Mastercard agree on a unified, lower fee structureThe pressure from CFIB for fairer fees would be relieved, potentially stabilizing costs for merchants.

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The full eventVisa and Mastercard adjust interchange rates and introduce new domestic fees Everything aboutMastercard

Brind's analysis is written by AI from the reporting linked above and can be wrong. This explainer is a possibility worth considering, not a forecast: steps marked as Brind's reasoning are not stated in the reporting. It is not investment advice; do your own research.