Visa and Mastercard are planning to raise credit-card network and interchange fees, according to a report by The Wall Street Journal.
The fee increases are scheduled to start in October and April, people familiar with the matter told the Journal, which also viewed documents confirming the increases.
The changes could result in retailers paying an additional $502 million annually in fees, said the report, citing CMSPI. Increases in network fees will make up a little more than half of that revenue, the Atlanta-based merchant consulting firm estimated. The rest will come from increases in the interchange fees, also known as swipe fees, the report said.
U.S. retailers paid an estimated $93 billion in Visa and Mastercard credit-card fees last year, the Journal said, citing the Nilson Report. That was up from about $33 billion in 2012.
Retailers pass along at least some of that cost to consumers in the form of higher prices, said the Journal. More small businesses have started offering discounts to shoppers who pay by debit card, cash or check, it said.
Card networks such as San Francisco-based Visa Inc. and Purchase, New York-based Mastercard set the fees that the retailers pay. Network fees go to Visa and Mastercard, while swipe fees go to the bank that issued the card. Visa, Mastercard and the banks have said the fees help cover costs related to fraud prevention and innovation. The banks often use the money they get from swipe fees to fund rewards programs, the report said.
Doug Kantor, general counsel of the National Association of Convenience Stores (NACS), Alexandria, Virginia, said that many businesses are already being hurt by inflation and high interest rates, or still recovering from the pandemic. “It’s just a bad combination and bad timing for any of these fee increases to happen,” Kantor told the Journal.
The bipartisan Credit Card Competition Act of 2023, designed to provide merchants relief from swipe fees, was reintroduced in Congress in June and has the support of the NACS, the Merchants Payment Coalition (MPC), the National Retail Federation (NRF) and other business groups.
Mastercard and Visa did not respond to a CSP request for comment by posting time..
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