Visa Inc and Mastercard Inc are looking to raise fees levied on U.S. merchants for the processing transactions according to the Wall Street Journal. Along with those fees, the charge to financial institutions (banks) for processing card payments on behalf of merchants are also set to go up. Some of the charges are related to the interchange fees which is the amount merchants pay to banks when consumers use a credit or debit card to purchase something from their store.
These recent hikes are set to start in April of this year but it will only affect the merchant banks and not the merchants themselves. Some of the top merchant banks in the country are JPMorgan, Citigroup, and Bank of America. Merchant banks maintain some pretty giant accounts for sellers such as Amazon and Costco.
The hike doesn’t seem like much but up to 2.5 percent of prices for goods and services go to cover card fees, according to the WSJ. It is up to the merchant banks if they want to pass on the fee hike to sellers, or absorb it themselves.
The U.S. has moved on from cash for the majority of buyers and more sales for merchants stem directly from debit and credit cards. More card action leads to more opportunities for fraud/theft so expenses have increased for security measures that need to be covered.
Visa and Mastercard have both been in the news as of late, settling the $6 billion lawsuit brought on by merchants who accused the credit card companies of violating antitrust laws by forcing merchants to pay swipe fees. This prohibited the merchants to be able to direct consumers towards other methods of payment. There were several other U.S. banks that were involved in this lawsuit.