new Delhi. After the inflation of petrol-diesel and food items, now the credit card is also going to shock the common man. Using it will now be more expensive than before. Visa and Mastercard are preparing to increase the fees on credit cards. According to people associated with the matter and The Wall Street Journal, the hike in fees during the last two years was postponed due to the pandemic.
However, from next month both the companies are going to increase the credit card fees. Interchange fees may increase the most. Merchants pay these charges, which are determined by the card network, when buyers use their card. The fee is paid to the bank that has issued the card.
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Reward credit cards have increased in popularity
In recent years, with the popularity of rewards credit cards, interchange fees have also increased. Usually higher fees are charged to cover the cost of traveling allowances and other benefits. But the honor rules for all cards in the network mean that merchants using Visa credit cards will accept payments from all cards.
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Huge increase in revenue possible
People associated with the matter say that Mastercard will also increase fees on more than a dozen in-store purchase categories. Small and medium-sized supermarkets will pay higher interchange fees on most rewards cards. Normal retail charges in-store will also increase. CMSPI, a consulting company that works with merchants, says the increase in MasterCard’s interchange fee could increase companies’ revenue by $330 million.
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$55.4 billion interchange fee payment
The Nilsson report said that merchants in the US paid card issuers about $55.4 billion in Visa and MasterCard credit card interchange fees in 2021. This amount was more than double the payment made in 2012. Most of the merchants have started charging extra charges from the consumers for paying by credit card.
Traders got help in epidemic
Visa and Mastercard say the ability to accept card payments helped businesses during the pandemic. Fees help cover costs related to fraud prevention and innovation. A Mastercard spokesperson says that our focus is to ensure the security of payments while balancing the interests of all parties. A Visa spokesperson said merchants can avoid higher fees if they provide some transaction data and use its tokenization service.
Tags: credit card, mastercard, Visa
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