According to The Wall Street Journal, two biggest card networks in the world, Visa and Mastercard, will raise up fees on credit and debit cards in April this year. The new change relates to interchange fees.
Merchants are financial institutions that maintain accounts for sellers, the biggest merchants in the US are JPMorgan, Bank of America, Citygroup.
Interchange fee is paid by merchants to banks when a consumer purchases any item using a specific card from card network which actually sets that fees. As such fees increase, merchants have to secure their profits, hence, they raise prices for items.
About 1.5-2% from the price of goods and services cover card fees. Consumers often pay for such fees whether they pay in cash or by card, while merchants pay billions of dollars for interchange fees every year.
According to the table on the left, merchants paid about $64 billion dollars last year to Visa and Mastercard for interchange fees on credit and debit cards. The number is 77% higher than it was seven years ago. And this year in April Visa will also push the fees up again.
The representative of Visa said to the WSJ:
“Visa’s network fees are paid by our financial institution clients and used to enhance the safety, efficiency and innovation of our platform, and are set based on market conditions and to reflect the value we deliver.”
In addition, she said that the new price changes will have an influence on fees which Visa has not adjusted for about three years. Mastercard, in his turn, declined to comment on this statement.
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