Payment Card Fees Make No Sense, And Here’s Why

Have MasterCard and Visa pulled out of the Australian market?

Hardly.

But, studying their fee schedules in Australia raises very clear questions:

1) With rates less than half as much as in the U.S. how can they afford to stay in business? 

2) Why are rates so much higher in the U.S? 

3) Why are some fee categories entirely derailed from reality?  

4) Charitable organizations in Australia pay no interchange fees (zero), yet in the U.S., interchange rates can be as high as 4% – 5% for some non-profit donation due to various fees, such as manual card imprinting and payment terms. 

Fact: The standard commercial interchange fee in Australia is under 0.50%, while it is nearly 1.70% in the U.S. 

Here are more facts as outlined by MasterCard on it’s website. Click here to view the “MasterCard Domestic Purchase Transactions Interchange Fees for Australia.”

Click here to view Visa’s similar fee structure.

Overview

According to the MasterCard website, here are some of the posted fees that ”apply to MasterCard purchase transactions in Australia where the card issuer and merchant acquirer are both Australian members.”

MasterCard Credit Card Transactions

Interchange Category	Interchange Rate (inc. GST)
Charities	0.00%
Tiered Merchants	0.374%
Governments and Utilities	0.33%
Petroleum	0.374%
Recurring Payments	0.33%
Quick Payment Service	0.33%
EMV Premium	1.265%
EMV Commercial	1.485%
EMV Consumer	0.693%
Commercial	1.265%
Consumer Premium	1.045%
Consumer Electronic	0.473%
Consumer Standard	0.473%

Debit MasterCard Transactions

Interchange Category	Interchange Rate (inc. GST)
Charities	0.00%
Tiered Merchants	$0.04
Governments and Utilities	$0.32
Micro-payments	0.55%
Petroleum	$0.10
Recurring Payments	$0.10
Quick Payment Service	0.55%
EMV Commercial	$0.45
EMV Consumer	$0.15
Commercial	$0.40
Consumer Electronic	$0.10
Consumer Standard	$0.40