Visa and Mastercard to Delay Increasing Swipe Fees Until Next Year
Earlier this year, two of the most popular credit card processors, Visa and Mastercard, announced plans to raise swipe fees. The fee increase was mainly for online credit-card purchases and was supposed to go into effect next month.
Swipe fees, which are also referred to as interchange fees, are often a contested topic between merchants and card companies. Merchants often end up paying fees of about 2% of their customers’ credit-card purchases. Online purchases, which have been more popular during the pandemic, are often even more expensive for merchants. The fees are set by Visa, Mastercard and other companies, and merchants pay them to the banks that issue the cards.
But, after announcing these fee increases of 0.05 to 0.10 of a percentage point, Visa and Mastercard faced criticism. Now both companies have said that they are postponing the planned fee hikes, citing the continuing effects of the coronavirus pandemic on businesses. The fee increases will be delayed until next April, MarketWatch reports.
Cash purchases have been declining for years, and Covid-19 has accelerated the shift to cards or wireless payments. That means that merchants are already paying more interchange fees, even before this planned fee increase. On the other hand, credit card issuers and processors claim that the interchange fees help cover the cost of innovation and preventing fraud, which is more prevalent online.
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