- According to sources familiar with the situation and documents reviewed by The Wall Street Journal, the fee rise will begin in October and April. Online purchases will mostly have these increased fees.
- Visa and Mastercard plan to increase fees for retailers accepting credit and debit cards, potentially costing over $500 million annually.
- With the increases, merchants could pay more than $500 million in additional fees each year, according to merchant-consulting company CMSPI.
- US merchants shelled out a record $160.7 billion on so-called swipe fees last year, up 16.7% from 2021, according to the Nilson Report industry publication.
Visa and Mastercard are looking to raise their credit card fee that merchants pay when they use customer’s credit cards for transactions, according to a report by The Wall Street Journal. According to sources familiar with the situation and documents reviewed by The Wall Street Journal, the fee rise will begin in October and April. Online purchases will mostly have these increased fees.
According to CMSPI, a consulting firm that works with merchants, the modifications may result in businesses paying an extra $502 million in fees every year. More than half of those funds will come from network charge increases, according to CMSPI. Increases in interchange fees, often known as swipe fees, will provide the remaining funds. These charges are borne by retailers whenever customers use credit cards.
The interchange fee economy is mostly unknown to consumers. However, the fees are a significant point of friction between the card networks and all types of merchants, from huge internet retailers to neighborhood coffee shops.
According to the Nilson Report, a trade journal, U.S. businesses spent an estimated $93 billion on Visa and Mastercard credit card fees last year. Comparatively, $33 billion was the amount in 2012.
At least a portion of the expense is transferred by retailers to customers in the form of higher pricing. Small companies are increasingly rewarding customers who pay with a debit card, cash or check with discounts.
The costs that retailers must pay are determined by card networks like Visa and Mastercard. Visa and Mastercard regulate the network fees. The bank that issued the card receives exchange fees.
According to Visa, Mastercard, and the major banks, the fees assist in clearing the expenses relating to fraud detection and innovation. The banks frequently subsidize well-known credit card rewards with the money they receive from interchange fees.
(With inputs from agencies)
