This increase will mean more merchants will have to pay higher fees when customers pay them by credit card. Having been postponed for two years now because of the pandemic, the fee increase is expected to roll out next month.
Visa and Mastercard, the world’s two leading credit card companies, are poised for an increase in the card fees charged by many major merchants when they accept payments from customers’ credit cards.
The two-year, pandemic-related fee increase is expected to go into effect next month, according to a source with the Wall Street Journal. Much of the increase comes from the exchange fee. This is the amount of fees charged by card-providing systems that merchants must pay when they accept credit card payments from buyers. This fee will then go to the bank that issued the card.
Although “invisible” to the buyer, the exchange fee is a constant concern of the sellers. In recent years, exchange fees have skyrocketed as credit cards with rewards become more and more popular. These cards often have high fees to offset travel and other incentives. But the card issuer network has a policy of “accepting all cards” – meaning that once a buyer has accepted a Visa card issued by one bank, it must also accept Visa cards from all banks.
According to a report from Nilso, the exchange fee that merchants have to pay to banks issuing VISA and Mastercard cards is about 55.4 million USD in 2021, double that of 2012. Merchants also have to put aside a part of this fee. to consumers by raising the price of the product. More and more businesses are asking consumers to pay a surcharge when paying by credit card
According to Visa and Mastercard, accepting credit cards has helped many businesses get through the pandemic. This fee, accordingly, merely helps to offset the associated costs of improving security and developing card-related technology.
The increased fees at Visa and Mastercard will apply to online purchases made with credit cards, according to the Wall Street Journal. A Visa spokesperson said merchants can avoid these high fees if they provide accurate transaction data and use token services that help keep their numbers secure. card.
According to CMSPI, a merchant advisory firm, the total increase in Mastercard’s interchange fees will cost merchants an additional $330 million annually.
A Mastercard representative said that the company will reduce costs for merchants with transactions under $5 and related to hotel, catering, healthcare and other industries affected by the virus. epidemic.
According to the document, Visa is also reducing the surcharge for online and merchant payments with an annual payment of $250,000 or less. The source said some retail items, such as convenience or grocery stores, restaurants and gas stations, will be free.
Last week, Visa also announced it would reduce fees by 10% for more than 90% of US businesses.