Visa and Mastercard Are Planning to Increase Credit Card Fees
Visa and Mastercard are reportedly planning to increase fees that merchants pay for accepting credit cards. These fee increases are scheduled to start in October and April, and were first reported by The Wall Street Journal.
Documents reviewed by WSJ show that many of the fee increases are for online purchases. Merchants could pay in total an extra $502 million per year due to the changes.
Network fees will make up a little more than half of that amount. The rest will come from increases in interchange fees, or swipe fees. This is a fee the merchant pays to the card-issuing bank every time a consumer swipes their card. Increases in fees merchants pay to card issuers are typically passed on to consumers.
Merchants in the United States paid an estimated $93 billion in Visa and Mastercard credit card fees last year. That’s total has almost tripled from 10 years ago. Merchants paid $33 billion in 2012.
Mastercard, Visa and big banks argue that fees help offset the cost of fraud prevention and innovation. Banks also use these fees to fund credit card rewards programs which are quite popular in the United States.
The timing of these fee increases in not ideal as lawmakers recently reintroduced legislation in both the House and Senate that would give merchants the ability to process many Visa and Mastercard credit cards over alternate networks. This is a rule already in place for debit cards, and could potentially lower the fees that merchants have to pay. On the other hand, lower fees normally mean less rewarding credit card programs.
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