Keep a close eye on your corporate card provider. Some are planning to make changes to their fees that’ll affect how much your company has to pay.
One prime example: Currently, Visa is overhauling its structure for interchange rates, reports media company Bloomberg. As you know, these are the fees your company gets charged every time an employee uses a card. They’re set by payment networks and paid to the card-issuing bank, which then transfers a part of the fee to the network.
In time, these fees have become an “important revenue stream for credit card issuers,” explains Business Travel News. And considering that the interchange structure has remained largely the same for the last decade, CFOs can see why adjustments to interchange rates are in the works.
Costlier online booking
What can you expect if you’re a Visa user? Some fees will rise, some fees will fall. The changes are set to roll out in two phases – in April 2020 and October 2020 – to give payment processors adequate time to implement all the necessary changes.
Perhaps most notably for CFOs, fees for “card-not-present transactions” – aka, payments made online, over the phone or with virtual cards – are set to increase.
The proposed changes are:
- For traditional Visa cards, the fee on a $100 transaction will rise to $1.99 (up from $1.90).
- For premium Visa cards, the fee will jump to $2.60 (up from $2.50).
That means if your employees use a Visa corporate card for online purchases or bookings (e.g., airfare, hotels) the total prices Finance sees are going to be steeper.
A domino effect?
Some analysts say Visa’s move may spur other providers, like Mastercard, to make similar structural changes. These two payment networks’ interchange rate structures generally tend to coincide, explains Business Travel News.
Essentially, any company that has a corporate card program should watch to see if and how their provider reacts to these developments with interchange fees.
Preparing your company
While these fee changes might seem minimal to employees, you and your finance department know how quickly a few extra cents on every expense can add up.
If your company uses Visa, now may be a good time to talk about factoring these changes into your financial budget, since they’ll affect anything that your employees buy with plastic. And even if you use another credit card provider, it doesn’t hurt to start thinking about how your budget will need to be adjusted if similar changes come your way.
Also: You could use this news as an opportunity to remind employees about making cost-effective choices with card purchases. Explain companywide that with certain fees rising, it’ll become that much more important for them to seek out the best deals whenever they’re booking or buying online.