Card-Network Changes Tie More Costs to Payment Setup

New Visa and Mastercard changes show that how a payment is set up can increasingly affect what it costs. Some changes add fees, while others provide savings or exclusions when transactions meet specific requirements.

The details vary by geography and payment type, but the direction is worth watching for subscription businesses. How recurring payments are classified and how payment data is handled can have financial consequences.

PayPal and Braintree outlined several of the upcoming changes in their fall 2026 card-network update published Friday.

Mastercard changes the treatment of some recurring payments

Beginning Oct. 12, Mastercard is changing a fee tied to Strong Customer Authentication exemptions in Europe and the UK.

Strong Customer Authentication, or SCA, is a European payment-security requirement that generally asks customers to verify an online payment using two independent forms of identification, such as a password plus a phone or biometric check. Certain transactions can qualify for exemptions.

Mastercard is replacing the current flat fee associated with some of those exemptions with percentage-based pricing that varies by transaction and geography. According to PayPal/Braintree, certain domestic and intraregional recurring and merchant-initiated transactions will be excluded from the fee.

For a subscription business, the business question is fairly simple: Are our recurring transactions being identified in a way that gives them the treatment we expect?

The technical work may sit with the processor or payment platform. The financial outcome still belongs to the business.

Visa offers an incentive for better data at checkout

Visa is taking a similar approach with its Digital Commerce Authentication Program, or DCAP, an optional program designed to give card issuers better information about an online transaction before they decide whether to approve it.

Merchants participating in the program provide customer and device information such as an email address, billing address, IP address and device ID. Visa says richer data can improve authorization performance, and qualifying transactions can also receive a financial incentive.

In Canada, beginning Oct. 24, PayPal/Braintree says qualifying transactions can receive a 10-basis-point interchange incentive while carrying a 5-basis-point enhanced-data fee, resulting in a net 5-basis-point incentive.

For subscription businesses, the scope is important. The incentive applies to qualifying customer-initiated transactions, such as the initial online purchase or signup. Merchant-initiated recurring renewals are outside the incentive program.

So this is primarily a checkout and acquisition issue, rather than a discount on every renewal.

Mastercard is also putting economics around card-on-file setup

More changes are coming in 2027. Beginning Jan. 1, Mastercard is revising pricing in Europe and the UK/Ireland around card-on-file transactions that are not tokenized, as well as transactions without authentication.

Card-on-file payments are common in subscription businesses because the customer's payment credential is stored for future use. Tokenization replaces the actual card number with a secure digital credential that can be used for payment processing.

The pricing details vary by geography and transaction type, but the broader point is easier to understand: how stored payment credentials are handled can affect payment economics.

Exactly how these network costs or incentives show up for an individual merchant will depend on its processor, acquirer and pricing agreement.

Insider Take

Payment costs are easy to think about as a processor-contract question. What are we paying per transaction? What did we negotiate? Are approval rates where they should be?

Those questions still matter, but card networks are putting more economics around what happens inside the payment flow.

For subscription businesses, that reaches into areas most executives rarely see, including how recurring transactions are identified, whether stored cards are tokenized and what information is sent with a payment.

Executives don't need to manage those details themselves. They do need to know whether anyone has checked them and understands the financial impact.

A useful question for the payment team, processor or billing platform is: How are these network changes affecting our payment costs, and is our current setup getting the best treatment available to us?

If the answer is simply, "our processor handles it," it's worth asking what "handled" actually means.

Sources

• PayPal/Braintree: Fall 2026 card-network release guide, published Sept. 4, 2026. 
• Visa: Digital Commerce Authentication Program.
• Visa: Merchant Business News Digest. 
• Mastercard: Transaction Processing Rules, June 9, 2026.