How Visa And Mastercard's New Fees Hike Are Impacting Your Wallet And Local Businesses!

In a recent move that has sparked concern among merchants, global payments giants Visa Inc V and Mastercard Inc MA are gearing up to increase credit card fees. This change, mainly aimed at online transactions, is set to be rolled out in October and again in April, potentially costing businesses significantly.

Also Read: Social Media and 'Buy Now, Pay Later' Trends Influence Amazon's Record-Breaking Prime Day: Analyst

The projected financial impact of these changes is substantial. The Wall Street Journal reports merchants might pay an additional $502 million in fees yearly. 

This increase will result from heightened network fees and interchange fees, commonly called swipe fees, which are charged to merchants every time a consumer uses a credit card for payment.

Over the past decade, the fee structure has seen significant growth. In 2012, U.S. merchants shelled out roughly $33 billion in Visa and Mastercard credit card fees. By 2022, this figure had rocketed to an estimated $93 billion, as cited by the Nilson Report.

One of the consequences of these escalating fees is the indirect burden on consumers. Merchants often offset these additional costs by hiking product or service prices. 

In response, many small businesses have begun incentivizing non-credit card payments, offering discounts to customers who opt for debit cards, cash, or checks.

Both Visa and Mastercard, along with central banks, justify these fees as essential to cover expenses related to fraud prevention and the continuous drive for innovation. 

Furthermore, the revenue generated from these fees often funds the credit card rewards programs that have gained popularity among consumers.

The payment giants seem to tap the surge in online spending reflected via Amazon.Com Inc's AMZN successful Prime Day event as Buy now, pay later mode of payment gains traction.

Price Actions: V shares traded higher by 0.97% at $247.73 on the last check Wednesday. MA shares traded higher by 1.32% at $417.09.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.