Visa and Mastercard Plan Credit Card Merchant Fee Increases

Visa and Mastercard are reportedly preparing to raise the credit card fees paid by merchants.

Those increases are scheduled to start in October and April, The Wall Street Journal (WSJ) reported Wednesday (Aug. 30), citing sources familiar with the matter and documents viewed by its reporters.

According to the report, many of the increases are for online purchases. Merchants could pay an added $502 million per year due to the changes, CMSPI, a consulting company that works with merchants, told the WSJ.

CMSPI estimated that higher network fees will make up a little more than half of that revenue, with the remainder coming from interchange fees — also called “swipe fees” — which merchants pay when consumers use their credit cards.

Reached for comment by PYMNTS on Wednesday, a Mastercard spokesperson said the WSJ story was “not correct.”

“We were clear on two points before the story was filed — there are no changes to Mastercard interchange rates and the one Mastercard ‘change’ referenced is an existing service we provide to acquirers, who can activate it as needed to drive a safer and more streamlined checkout experience for consumers,” the spokesperson said. 

PYMNTS has contacted Visa for comment as well but has not yet received a reply.

Both companies’ use of interchange fees were the subject of an antitrust lawsuit filed last month by Block — which owns the payments platform Square — saying the firms conspired to inflate fees and increase retail prices.

“The effect of these artificially inflated fees — assessed to and paid by Square — is higher retail prices paid by consumers economy-wide,” Block said in the suit. 

The company further claimed that these fees are “highly complex, difficult to calculate, and unavoidable,” especially now that Visa and Mastercard are raising the fee incurred by Square based on the number of merchant locations they provide for.

As the WSJ noted, Mastercard, Visa and big banks argue that fees help offset the cost of fraud prevention and innovation, with banks using the money they get from interchange fees to pay for credit-card rewards programs.

Meanwhile, recent research by PYMNTS and Elan Credit Card finds that consumers tend to rely on credit cards more as inflation grows.

“While 28% of respondents who reported experiencing just a slightly negative or no impact from inflation increased their spending by credit card, 43% of those who reported experiencing a very or extremely negative impact did so,” the report said.

In all, 33% of credit card holders across all demographics upped the share of their expenses paid using credit cards in the last six months, while just 15% reduced it.

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