Mastercard And Visa To Raise Credit Card Fees For Merchants: Will Consumers Be Paying More?

Mastercard Inc. MA and Visa Inc. V are planning an increase on the fees that many large merchants pay when they accept credit cards carrying the companies’ brands.

What Happened: The Wall Street Journal, citing unnamed “people familiar with the matter” and an internal document that was not released to the public, reported the fee increases are scheduled to go into effect in April after being delayed for two years due to the pandemic.

The increase focuses on the interchange fees that are set by Mastercard and Visa, which are paid by merchants to the financial institution that issued the cards. U.S. merchants paid card issuers an estimated $55.4 billion in interchange fees in 2021, more than double the amount in 2012.

Many merchants pass along some of the costs from these fees to consumers by raising the prices on products and services. Some merchants charge consumers extra when paying with credit cards instead of cash.

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What Else Happened: In addition to the increase in the interchange fees, Mastercard is planning to raise its fees on more than a dozen in-store purchase categories, most notably in small and midsize supermarkets that will pay higher interchange fees on most rewards-driven credit cards, and will also hike in-store general retail fees. The consulting firm CMSPI estimated the company’s fee changes will create a net annual increase of around $330 million for merchants.

Visa, however, plans to lower fees for online and in-store purchases at some small merchants with $250,000 or less in annual consumer credit-card volume, and will exclude the fees in some retail sectors including convenience or grocery stores, restaurants and gas stations. Visa stated this change will decrease fees by 10% for more than 90% of U.S. businesses.

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