Lower Credit Card Fees for Small Businesses: What You Need to Know

As of October 19, 2024, a new agreement between the federal government and major credit card companies, Visa and Mastercard, has reduced merchant fees for small businesses. This change, which follows an announcement made in May 2023, is designed to ease the burden on small businesses by lowering the costs associated with accepting credit card payments.

Key Features of the New Agreement

Under this new agreement, small businesses with up to $300,000 in annual Visa sales or $175,000 in annual Mastercard sales are eligible for reduced interchange fees. The specifics of the deal include:

• Lower Interchange Fees: For businesses that meet the criteria, the average interchange rate for in-store sales will drop to 0.95%. For e-commerce transactions, there will be a 0.1% reduction in fees.
• Fee Reductions of Up to 37%: The majority of small businesses will see interchange fee reductions of up to 37%, which can result in significant savings.
• Clearer Processing Rates and Fees: Small businesses will benefit from clearer, more consistent language across payment processors. This should help businesses better understand the costs associated with accepting credit card payments and avoid hidden fees.
• Dispute Resolution: A new, independent system will be in place to help resolve disputes between merchants and payment processors. This is intended to make the process of challenging chargebacks more fair and simple for businesses.

Who Qualifies for Lower Fees?

If your business meets the following criteria, you may qualify for lower Visa and Mastercard fees:

• Visa: Small businesses with up to $300,000 in total annual Visa sales.
• Mastercard: Small businesses with up to $175,000 in total annual Mastercard sales.

It’s important to note that new businesses are automatically eligible for these lower fees, and eligibility will be reviewed annually.

How Much Could Your Business Save?

Depending on the type of cards your customers use, the savings can be substantial:

• Visa: For most small businesses, Visa rates will drop by 25-35%, translating into $300-$400 savings for every $100,000 in transactions.
• Mastercard: Mastercard fees will decrease by approximately 20%, which could save businesses $200 per $100,000 in transactions.

These savings can add up quickly, especially for businesses that rely heavily on credit card payments.

The above chart was provided by CFIB. Chase, a Foodbuy partner, is passing along savings to consumers.