MasterCard announced that its assessment fee will increase to 0.13% effective April 8, 2018. The card brands update their Interchange guides biannually in October and April. This change will represent a 0.0025% increase from MasterCard’s October 2017 rate of 0.1275%, equating to an extra $0.13 in MasterCard assessment fees for every $5,000 processed per month.
The MasterCard assessment fee increase will apply to all MasterCard debit transactions going forward, as well as for all consumer and commercial credit card purchases and cash advances totaling less than $1,000.
So, what is an assessment fee and why do businesses pay for it?
Why Assessment Fees Are Charged
Dues and assessments are pass-through fees. These fees are charged by the card brands to Merchant Account Providers, who pass them on to businesses. These fees cover the following functions for the card brands:
- Network operations involved in running transactions
- Marketing expenses
- The setting of prices and rules
- Research and development into new fraud-prevention technologies
As of the October 2017 Interchange Guide, Discover, Visa and MasterCard all charge between 0.11% and 0.13% in dues and assessment fees, while Amex charges 0.15%. However, most business owners do not know these rates offhand, which makes dues and assessments a popular fee for unethical providers to markup on their merchant statements.
Luckily, if you know the true pass-through rates for assessment fees, it’s easier to spot a markup. Simply go to the line item for each card brand’s assessment fee. It might look something like this:
Now, simply subtract 0.13% from the rate noted. The difference is the markup your provider is unfairly pocketing. In the above example, the difference would be 0.064% for the new MasterCard assessment fee rate.
Businesses that accept MasterCard transactions should not see a change in MasterCard assessment fee rates before the noted date of April 8, 2018.
Have questions about pass-through fees? Spot a fee you don’t recognize? Let us know which fees you have questions about in the comments section below.