Mastercard Set to Increase Credit Card Fees, Adding Millions in Costs for Retailers After Visa Settlement | Benzinga
Mastercard Inc. is stirring the pot in the financial world by announcing an increase in specific credit card fees starting April 15. This move is particularly eyebrow-raising as it follows closely on the heels of a massive $30 billion settlement with Visa Inc. This settlement, aimed at providing financial relief to retailers over swipe fees, seemed to ease the financial burden on merchants. However, Mastercard’s latest decision appears to be moving in the opposite direction.
The fee in question is the network “assessment” fee, which is set to rise from 0.13% to 0.14%. While this might seem like a small increment, it translates to an additional $259.1 million in fees, given last year’s transactions exceeded $2 trillion. This information comes from the Merchants Payments Coalition, a group that has been vocal about advocating for lower payment fees. They argue that these costs ultimately fall on retailers through banks, adding to the financial strain on merchants.
It’s important to differentiate between assessment fees and swipe or interchange fees. Assessment fees are levied on banks for each transaction made with Mastercard or Visa, while swipe fees are paid to the card-issuing bank. The recent agreement to cap swipe fees was expected to save retailers around $30 billion and end longstanding litigation. Analysts had hoped this deal would ease regulatory pressure on Visa and Mastercard and prevent further reductions in interchange fees.
Despite these developments, many merchants plan to continue their legal battles against Visa and Mastercard. They accuse the companies of conspiring on credit card fees and seek additional monetary compensation. Doug Kantor, a representative from the merchant coalition, criticized Mastercard’s decision to raise fees, pointing out that merchants end up bearing the cost of such increases. He also highlighted that Visa and Mastercard have a history of adjusting their fees biannually, often leaving merchants in the dark until the changes directly impact them. This ongoing saga of fee increases has been a contention since 2011, with merchants feeling the squeeze…………
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Considering the recent developments in credit card fee adjustments and the ongoing disputes between merchants and credit card companies, how might these financial dynamics influence consumer behavior and the overall retail landscape?
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The recent developments in credit card fee adjustments and ongoing disputes between merchants and credit card companies could influence consumer behavior and the overall retail landscape in shift in payment preferences, merchant consumer relationships, price adjustments, consumer awareness, etc.