Visa and Mastercard Cardholders Will Pay $700 More in Fees
Two of the most popular credit card processors, Visa and Mastercard, announced plans to raise swipe fees in 2021. The fee increase is mainly for online credit-card purchases and was supposed to go into effect in April, about a year ago. However, those plans were delayed due to the pandemic.
Now the increase in swipe fees is expected to go into effect this month. These Visa and Mastercard fee increases will apply to many online credit card purchases. Mastercard will also raise fees on more than a dozen categories of in-store purchases.
Earlier this week, the National Retail Federation (NRF) urged the payment providers to cancel the scheduled swipe fee increases. They joined both Republican and Democratic members of Congress, saying higher fees would add to inflation.
On Friday, Senators Roger Marshall, R-Kan., and Richard J. Durbin, D-Ill., and Representatives Beth Van Duyne, R-Texas, and Peter Welch, D-Vt., sent a letter to Visa and Mastercard asking that they withdraw plans to implement a package of swipe fee increases this month.
Visa, Mastercard and the banks that issue their cards charged retailers $77.5 billion in credit card swipe fees last year and $28.1 billion in debit card swipe fees, the letter said. Swipe fees for all types and brands of cards totaled $137.8 billion in 2021, more than double the amount 10 years earlier, according to the Nilson Report. Swipe fees, which average 2.22 percent of the transaction amount for Visa and Mastercard credit cards, are most merchants’ highest operating cost after labor.
According to the NRF, the fees drive up consumer prices, amounting to more than $700 a year for the average American family. Visa and Mastercard control roughly 80% of the credit card market.
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yes but retailers accepting cash is definitely not free as they have to pay the banks to bring it, count it, the time is takes to go to the bank to make a deposit every day, or pay a service like Brinks and buy expensive safes, and of course the theft that occurs. I am sure the analysis does not take these costs into account.
This is a confusingly written article. The article itself has accurate information, but the headline muddles it.
No, it is not Visa and MC cardholders that will pay more in fees. It’s everyone.
The way it works is that stores can’t charge different prices for cardholders; that’s against card processing agreements. Stores also don’t know what your payment method will be. They can use historical information to make an educated guess though. So when their items are marked up, payment fees make up part of that markup. You are also correct in saying that accepting cash has its risks, and yes, paying a security firm to handle your cash deposits can be as expensive, if notro so, than processing card payments.
So the facts in the article are accurate, the headline is wrong. Everyone will pay mor to absorb this fee increase, it won’t just be Visa and MC cardholders.