- General
- February 15, 2019
- 5 minutes read
Mastercard, Visa Reportedly Mulling To Up Merchant Transaction Fees
Mastercard CEO Ajay S. Banga image : World Economic Forum / Benedikt von Loebell Mastercard and Visa, the two largest…
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| Mastercard CEO Ajay S. Banga
image : World Economic Forum / Benedikt von Loebell
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Mastercard and Visa, the two largest U.S. card networks, are said to be preparing to increase certain fees it charges U.S. merchants for transaction processing. The Wall Street Journal reports this, citing people familiar with the matter. According to WSJ, some of the changes relate to interchange fees – transaction fees that a merchant pays whenever a customer makes use of a credit/debit card to make a purchase from their store – and will take effect by April.
The paper also says that fees levied on financial institutions – like banks – by Mastercard and Visa, for card payment processing on behalf of merchants are also set for an increase. This report comes few months after Mastercard and Visa agreed to pay $6.2 billion in settlement to end a long-running price-fixing case brought against it by merchants. Merchants accused both companies of violating anti-trust laws by forcing retailers to pay swipe fees and preventing them from directing customers to other payment methods. The settlement marked the largest-ever class action settlement of an antitrust case in the U.S.
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| A Visa card being used for mobile payment via a Square card reader
image : Square
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Merchants often pass on increases in processing fees to customers, in a bid to guard their own profits. Up to 2.5% of prices for goods and services are used to cover card fees, the WSJ said. Card companies have in the past said that their debit and credit cards generally drive more sales for merchants, They also say that additional expenses – like anti-fraud measures, aimed at safer payments processing, need to be covered.
Mastercard and Visa make up a significant amount of all card payments processed in the U.S., with a combined 87% market share, according to CardWeb. Along with American Express and Discover – two other top card U.S. card networks – a combined $1.75 trillion was processed in the third quarter of 2018, by the top four U.S. payment card networks. Mastercard also recently said it has plans to secure a license to operate in China, a very large market, with American Express as the only U.S. card network with approval to clear card payments in the country.
