Popular payment processing companies like Visa and Mastercard seem to be accepted by some merchants more than others. The same banks may use Visa and Mastercard to help connect merchant accounts to banking companies, but one vendor may only take Visa while another merchant takes Mastercard. Why does this trend happen?
It is important to understand that a merchant is accepting to use Visa and Mastercard as a way for consumers to pay for goods and services. In order to make money, the companies like Visa and Mastercard need to charge fees to merchants and banks for facilitating the service between the two. For a merchant, particularly a small business, many of these fees and rules to follow can be too costly or cumbersome.
One of the main factors driving merchants to accept one company over the other are the payment processing fees. These fees are one of the main sources of revenue that companies like Visa and Mastercard make. Fees can include monthly fees for accepting Visa and Mastercard and a per-transaction fee. Other fees can be quite specific depending on the exact transaction involved. For example, Visa has an Acquirer Processing Fee (APF), which is a fee per transaction for any merchant in the United States. The Visa APF is at a flat fee of $0.0195 per transaction. However, the International Acquirer Fee (IAF) is a fee for any US merchant who receives as a payment a Visa card issued by a foreign bank. The fee is a percentage of .40% added to the cost of the good or service. Mastercard has specific fees as well, like the $0.0075 Address Verification System (AVS) fee. This AVS fee is applied to any transaction when the merchant wants to verify the address of the buyer. Another fee includes the Cross Border Assessment fee from Mastercard, which is a 0.0045% fee applied to merchants if they conduct transactions in another currency besides the US dollar.
Customers may be frustrated when a merchant only takes one card over the other, but these specific fees and regulations can hurt some businesses. Knowing how Mastercard and Visa will affect merchant accounts through these added on fees is important.