How to Protect Your Subscription Business from Rising Interchange Rates

Subscribe Our Newsletter

It hasn’t happened in nearly a decade, but Visa has announced it’s going to be making changes to the interchange rates U.S. merchants pay when accepting its cards. These rates, which help determine the fees merchants pay on each transaction, will be going up—or in some cases down—depending on the merchant and the way customers choose to pay.

Fees on card-not-present transactions, which include all online and over-the-phone payments, are set to increase. This means most online subscription businesses can expect to see a rise in the transaction fees they pay to their payment gateway providers. And fees add up quickly, especially if your business is scaling and processing a growing number of recurring transactions every month.

Set to start rolling out in April 2020—these interchange rate adjustments will affect Visa’s published rates. This doesn’t mean banks and payment networks can’t negotiate with merchants for lower pricing, but in most cases, it’s going to affect merchants’ gross margins for the worse.

Will your subscription business be affected by rising transaction fees?

That depends.

The effects of Visa’s interchange rate announcement will vary for merchants that process card-not-present transactions and will be largely contingent on how a business’s gateway provider chooses to account for the rate increases.

Payment processors are already starting to make updates to their systems to account for Visa’s rising rates.

Here’s how it works:

  • Your chosen payment gateway provider incurs the interchange fees charged by the cards it processes—in this case, Visa.
  • In turn, when your business processes its transactions through that payment gateway, it covers the interchange fees paid by the payment gateway provider along with an additional processing fee for the gateway provider.

Typically, the fee structure for merchants includes a percentage of the transaction plus a cost per transaction.

For example, your payment gateway provider may charge 3% + $0.50 per transaction. This means for a $100 transaction:

  • Your business would pay $3.50 to the gateway provider and make $96.50 on the transaction.
  • However, with the new interchange fee, your business would pay an added cost for the increase in addition to the above, creating a further drain on your gross profits.

For most payment gateway providers, the fee structure gets more complicated depending on which type of card is used, and which level of card it is—for example, merchants often incur a steeper transaction fee when customers use premium cards.

Therefore, you may think your business is paying a certain rate for transactions, but it could end up being much higher. And it doesn’t end there.

Many gateway providers also charge setup fees, monthly fees, and high chargeback-fees in cases when cards are fully declined.

Merchants can also face challenges with decentralized support for their customers—which can create confusion and frustration—as well with a disjointed user-experience.

When customers are sent offsite to the payment gateway’s dashboard for payment processing and they’re shown branding that doesn’t reflect the company they think they’re dealing with, it can cause concern and mistrust. And as we all know, people prefer to work with businesses they trust.

Download the Complete Guide to Subscription Billing
Complete Guide to Subscription Billing

This guide will walk you through the wide range of features required to automate your recurring billing, subscription management, and payment processes.

Free Download

Reduce your risk of rising fees and simplify your subscription payment process

At Fusebill, we partner with our customers to show them what they're really paying in terms of transaction fees. Many come to us thinking they’re paying a much lower rate than they are. It’s not until they let Fusebill provide them with a true ROI analysis/model that they really understand what they’re paying each month.

For example, one of our client companies was convinced it was paying a certain fee per transaction with its previous payment gateway provider. But after we analyzed several months of its transaction data, we determined the company was paying an average of 4.5% per transaction—about two percentage points higher than it thought.

Complicated payment structures and fluctuating transaction fees present risks to your business.

Rising fees can affect your profits and gross margins, which can have a huge effect on your short- and long-term business planning and decision-making. And your business’s churn rate could increase if customers become fed up with onerous payment support services.

During our decade in business, the Fusebill team has seen—time and time again—the negative repercussions that complicated and unpredictable payment transaction structures can have on companies. That’s why we developed our own solution, available to businesses that use our automated subscription billing platform.

Going above and beyond a payment gateway, we created Fusebill Payments to eliminate the pain points we saw customers experiencing.


First off, to address the risks associated with fluctuating interchange rates, merchants using Fusebill Payments have simple, transparent pricing, which includes a fixed fee per transaction. This means no matter what happens with the interchange rates for any card, your rate will stay the same.

Any subscription business that’s processing over $1M annually via credit cards can at times save tens of thousands of dollars every year just by switching to Fusebill Payments. In addition to potentially huge savings on recurring transaction fees, our payment gateway also offers the following:

  • No setup fees and no monthly fees. Just simple, comprehensive pricing and value.
  • Full integration with our recurring billing software. This means you can manage payments and initiate refunds directly from your Fusebill portal.
  • Consolidated support. Your customers interact directly with us for all payments support. 
  • Account card updater. This automatically reduces failed and late payments on tokenized stored credit and debit card information.
  • Dunning management. Reclaim lost revenue from expired credit cards and failed payments with automated dunning emails.

We also made the process of switching over from your business’s current payment gateway to Fusebill Payments seamless.

A lot of businesses have concerns about disrupting their revenue flow,” says Tyler Eyamie, Fusebill CEO. “We completely understand that—payment processing is the heartbeat of your business. We’ve ensured businesses can switch to Fusebill Payments without skipping a beat in terms of their payment processing.”

Moving your business’s payment processing to Fusebill Payments can be done in under a minute (we timed it!) and with just a few clicks of a button.

If you’re looking to automate and enhance your subscription billing process, our software is an ideal solution that offers integration with Fusebill Payments—our best-in-class payment processing solution. Or if you’re already with Fusebill, updating your gateway couldn’t be simpler. We guarantee to save you on your current processing fees!


Interchange rate changes are coming for Visa, and other major cards have yet to comment on whether they’ll be making updates as well.

Taking control of your business’s transaction fees by locking in your rate and integrating your gateway with your billing platform reduces your revenue risks over the long-term and can ultimately increase your profit.

Subscribe Our Newsletter

Tags: Payments Subscription Business

Daniella Ingrao

Daniella is the Content Marketing Lead at Fusebill. She is a former journalist with a specialized background in the topics of business and finance. She also has nearly a decade of experience crafting and sharing stories that matter for both B2B and B2C companies. Daniella now works closely with Fusebill’s subject matter experts to impart knowledge and best practices for competing and succeeding in both the SaaS and subscription business spaces. She is passionate about equipping businesses with the information they need to reach their full potential.

Newsletter Subscription

The Complete Guide To Subscription Billing