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If you can’t beat ‘em…double down and see what happens, as we believe the saying goes.
Visa and Mastercard reportedly will raise the fees merchants pay when customers use credit cards in October and again in April, according to the Wall Street Journal. The increases could cost companies an additional $502 million a year.
These fees have been under a microscope since Congress introduced bipartisan legislation known as the Credit Card Competition Act earlier this year. It would give merchants the option of routing credit card payments through an unaffiliated network, as opposed to going through Visa or Mastercard’s networks.
- According to the WSJ, more than half of that $502 million would come from higher network fees, while the remainder would be from swipe fees.
- As of now, swipe fees can average between 2% to 4% of transactions and cost merchants up to $160 billion a year, according to the Nilson Report.
“It’s just a bad combination and bad timing for any of these fee increases to happen,” Doug Kantor, general counsel of the National Association of Convenience Stores, told the WSJ, explaining that many businesses are still in a tough position because of the pandemic.
Opponents of the Credit Card Competition Act include banks, networks, trade groups, and credit unions, who argue that the legislation, if passed, would hurt consumers by scaling down rewards programs and minimizing access to credit. Advocates of the bill, including the NRF, argue that the swipe fee increase schedules are a violation of antitrust law and also hurt shoppers through price hikes.