Report: Visa, Mastercard to increase fees

Visa and Mastercard reportedly plan to increase the fees businesses pay every time a customer uses a credit card..As reported by The Wall Street Journal, the increases, many for online purchases, are slated to begin in October and April. The changes are projected to cost businesses an additional $502 million annually, half from the increased network fees and half from interchange fees, according to merchant consulting company CMSPI..National Association of Convenience Stores General Counsel Doug Kantor criticized the decision, saying small businesses are still recovering from the pandemic and are already being harmed by high interest rates and inflation. "It's just a bad combination and bad timing for any of these fee increases to happen," he added. .Reached for comment by PYMNTS last week, a Mastercard spokesperson said the WSJ story was incorrect. "We were clear on two points before the story was filed — there are no changes to Mastercard interchange rates and the one Mastercard 'change' referenced is an existing service we provide to acquirers, who can then activate it as needed to drive a safer and more streamlined checkout experience for consumers," the spokesperson said..Studies have shown that credit card companies and banks gather much more swipe fee revenue than a decade ago. According to industry publication Nilson Report, credit and debit card swipe fees have more than doubled over the past decade to reach $160.7 billion. U.S. merchants reportedly paid about $93 billion in Visa and Mastercard credit card fees, a large increase from the $33 billion they paid in 2012. Last year, credit card companies and banks reportedly gathered nearly $130 billion in swipe fees, a 20 percent increase from the previous year. .Following the release of the report, Sens. Roger Marshall (R-Kan.) and Majority Whip Dick Durbin (D-Ill.) called on the companies to withdraw their plan. The Senators reintroduced the Credit Card Competition Act in early June, which would require banks with more than $100 billion in assets to offer merchants at least two networks to process credit cards, one of which cannot be owned by Visa and Mastercard. Community banks would be exempt from the requirement. Durbin and Marshall originally introduced the proposal last July, but it didn't receive a vote in 2022. ."We strongly urge Visa and Mastercard to withdraw their plan to raise credit card fees on small businesses owners and hard-working American families," the lawmakers stated in a press release..Merchant lobbying groups support the bill, arguing it would reduce interchange fees by breaking the hold Visa and Mastercard have on the credit card network market. The two companies account for more than 80 percent of the market. Visa, Mastercard and a number of large banks have said the fees help cover fraud prevention and innovation expenses.