Natasha Macmillan, Business Unit Director - Everyday Banking
Visa and Mastercard, the world’s two largest global payments processors, are allegedly planning to increase the fees that merchants pay when accepting customers’ credit cards. These fees are commonly referred to as “interchange fees” and play a significant role in how credit card transactions work.
The increase in these interchange fees implies that merchants may have to pay more when accepting credit card payments. As a result, these additional costs are typically transferred to consumers in the form of higher prices. According to the Wall Street Journal report, these fee increases are scheduled to start in October and April. It is essential for consumers to monitor these changes and consider how they might affect their personal finances. It is anticipated that many of the fee increases are expected to affect online purchases.
These most recent plans to increase interchange fees follow a significant change to surcharge regulations introduced last October. Following a lengthy class-action lawsuit led by businesses against Visa and Mastercard, along with a $188-million rebate to businesses as compensation for previously collected interchange fees, businesses were given the option to offset credit card processing fees by passing the surcharge on to consumers. While it was anticipated that consumers might feel the impact of this regulation, very few merchants welcomed the new regulation; instead, they would have preferred a significant reduction in the fees.
Mastercard on Tuesday denied reports saying they were planning to increase the fees merchants are charged when customers use their credit cards. Visa also stated in a blog post that the recent coverage on this issue is “misleading”, and that “despite strong growth in the use of Visa cards, [our] overall interchange fees on Visa transactions have been flat for the past decade.”
Overall, these potential changes in interchange fees and regulations will have implications to both merchants and consumers. We will be keeping a close eye on these developments and share them as more information becomes available.