Visa and Mastercard Will Increase Fees Next Month
Credit card processors Visa and Mastercard plan to go ahead with fee increases. This was announced previously but was put on hold due to the COVID-19 pandemic. The fee increases should go into effect next month. The news was first reported by WSJ.
These fees have increased in recent years as more people use rewards credit cards. These cards typically come with higher fees for merchants. But they can’t turn away these premium cardholders, because Visa or Mastercard do not allow them to pick and choose which cards they can accept within the network.
U.S. merchants paid card issuers about $55.4 billion in interchange fees on Visa and Mastercard credit cards in 2021. That’s more than double the total fees in 2012. Even though these fees are paid by merchants, they often pass the cost to consumers by raising the prices on products and services. A recent trend has also emerged where merchants charge consumers an additional fee when paying with credit cards instead of cash.
These Visa and Mastercard fee increases will apply to many online credit card purchases, according to the document and people familiar with the matter. Mastercard will also raise fees on more than a dozen categories of in-store purchases. Small and medium sized supermarkets will pay higher interchange fees on most rewards cards, WSJ says.
In addition to the increasing interchange fees, Mastercard is also planning to raise its fees on more than a dozen in-store purchase categories, most notably in small and midsize supermarkets. They will pay higher interchange fees on most rewards-driven credit cards, and will also hike in-store general retail fees.
But both companies point out that some fees will actually go down. A Mastercard spokesperson said the company is reducing costs for all merchants transacting less than $5. Hotels, casual dining, daycares and other industries hit hard by the pandemic should also see some lower fees. Visa is reducing fees for online and in-store purchases at some small merchants with annual credit card volume of $250,000 or less.
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I afraid I am going to see more and more places charge you a % to use a card. It doesn’t really make sense to use a reward card and earn 1-4% and then pay a 3% fee for using the card. I think the merchants might get less people using cards if they give a cash discount. Many people will look at the discount and jump on it.
Visa/MC/Amex has rate increases every April. Maybe they didn’t due to Covid, but it’s a yearly occurrence. USPS/FedEx/UPS have their yearly increases in January.