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February 18, 2019

Visa and Mastercard weighs option to raise payment processing fees

US card networks Visa and Mastercard are mulling plans to increase fees for payment processing.

This was reported by the Wall Street Journal.

Under the move, card networks might increase interchange fees, which merchants pay to banks when consumers make purchases with cards.

According to the report, card networks might also raise the fees imposed on financial institutions for processing payments on behalf of merchants.

The move is said to be effective from this April for merchant banks.

Card networks often raise prices on the pretext of enhanced security controls and claim that cards translate to increased sales.

However, this in turn results in price rise. Furthermore, this is usually done in such cases by merchants to cover the extra expenses.

Card fees are said to constitute around 1% to 2.5% of prices for goods and services.

In September 2018, Visa and Mastercard along with a group of US-based banks agreed to pay $6.2bn to settle a dispute on card fees charged to merchants.

The banks involved in the settlement include Citi and JPMorgan Chase.

Recently, Mastercard and Visa agreed to reduce fees paid by merchants for accepting debit or credit cards issued outside the EU.

The move is in response to an antitrust probe by the European Commission.

 

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