MasterCard has revised their convenience fee rules (email me for a copy) so that basically, they now say you cannot disadvantage the MasterCard brand.  So, if you are a Tax Collector offering Visa’s Incentive $3.95 convenience fee on tax payments made with a Visa debit card, you must also offer MasterCard at the same price ($3.95 regardless of the transaction amount)… if you want to offer MasterCard debit acceptance, with a convenience fee, alongside Visa debit.

MasterCard has always allowed this (but never required it until now) and, unlike Visa, they never associated a lower interchange (what they and their issuing banks charge you or your vendor) so that money was not lost on these transactions.  For example, under MasterCard’s current interchange rates, a $1,000 tax payment would cost you or your vendor 0.8% ($8) + $0.25, plus communication fees and dues and assessments (roughly a total of $9 for the transaction) but if you or your vendor can only charge a convenience fee of $3.95, that’s a loss of $5 on each transaction and no vendor is going to do that.  Visa reduced their interchange for tax payments with a debit card to a fixed $2.50 when they announced their incentive convenience fee for tax payments with a Visa debit card in October 2008.

MasterCard’s postponement nicely coincides with MasterCards and Visa’s scheduled October/April rules and interchange announcements, suggesting MasterCard will offer a revised interchange to address this in April.  This is no doubt also being fueled by Visa’s step up in enforcement of the $3.95 debit convenience fee requirement, which most vendors still don’t do.

Overall this will be good for you, your constituents and your employees as bot major brand debit cards could be offered at the same low fixed fee rate regardless of the amount of the transaction.