US card issuer finds $14.0M in potential network fee savings, including $5M in waivable Mastercard fees
A two-week, targeted review of this $20-30B US issuer's network fees found $14.0M a year in potential savings, most of it in fees to waive or correct. Mastercard fees documented as mandatory could be waived, and acquiring fees billed to an issuing-only program were reversed with a historical refund.
| Client type | Card issuer |
|---|---|
| Size | $20-30B annual card purchase volume |
| Market | United States |
| Scope | Targeted review of the highest-value opportunities |
| Analysis time | 2 weeks |
| Line items flagged | 29 |
| Potential savings | $14.0M a year |
| Waivable Mastercard fees | About $5M a year |
| Acquiring fees billed in error | Reversed, with a historical refund |
| Savings relative to volume | 4-6 bps |
What did the review find?
About $5M a year in Mastercard fees were documented as mandatory, but they can be waived.
The program only issues cards, yet it was being billed acquiring fees. Those fees were reversed and a historical refund was applied.
Where did the savings come from?
Fees to waive or correct made up most of the total, led by the waivable Mastercard fees. The rest came from charges worth contesting with the networks, best practice changes and services the issuer didn't need.
| Category | Amount | Share |
|---|---|---|
| Fees to waive or correct | $11.8M | 84% |
| Fees to challenge | $1.6M | 11% |
| Best practice and opt-outs | $0.6M | 5% |
| Total | $14.0M | 100% |
How long did it take, and what data was needed?
The analysis took 2 weeks, because the issuer needed results quickly, and used its network invoices. No system integration was required.
What does this mean for other issuers?
Mandatory doesn't always mean mandatory. Some network fees documented as required can be waived, and fees meant for a different line of business can end up on the wrong invoice.
Both are hard to spot from inside, because network invoices run to hundreds or thousands of lines.
Questions and answers
Can network fees documented as mandatory be waived?
Some can. In this review, about $5M a year in Mastercard fees documented as mandatory could be waived.
Can a card issuer be billed acquiring fees by mistake?
It happens. This issuing-only program was being billed acquiring fees, which were reversed with a historical refund applied. The reverse happens too: acquirers can be charged issuing fees, and the same fee can show up on more than one invoice. These are among several error patterns we see from the networks. They don't happen with every client, but when they do, they're generally material.
Does a targeted review find less than a full network fee review?
It covers fewer line items. This targeted review took 2 weeks and flagged 29, compared with 100-150 in the full reviews in these case studies.
Fees to waive or correct include waivable fees, fees billed in error and fees flagged against expected billing. Figures are annualized from network invoices.
Most programs we review are paying network fees they don't need to. A review takes 4-6 weeks and needs only your network invoices and volume reports.
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