Visa and Mastercard are planning to hike the fees that merchants pay when customers use their credit cards for a transaction. The fee increases, mostly aimed at online purchases, are set to start this October and next April, according to The Wall Street Journal.
Online shopping’s popularity – as well as the use of credit cards for those online purchases – skyrocketed during the COVID-19 pandemic and numbers are only expected to rise in the future. In addition to contending with inflation, businesses may have to raise their own prices to offset this latest fee increase. TKTK WHAT firm estimates that merchants may shell out an additional $502 million annually.
Those higher fees come on top of rising prices everywhere, with streaming services no exception. The last year has seen price increases for YouTube TV, Disney+, Hulu + Live TV, Peacock, Fubo and more. Given that many consumers pay for their services with credit cards, these companies will feel the pressure, and it may translate to higher costs for subscribers down the line.
It’s getting pricier on the cable and broadband side too. Businesses like Consumers Energy, T-Mobile, AT&T and Spectrum that once offered autopay discounts for credit card users are no longer able to because of said fees, or require switching to a debit card. Without the discounts, it’s easier for customers to overpay. Cord Cutters News recommends regularly checking to ensure the right accounts are linked for service payments.
In 2022, US merchants paid upwards of $93 billion in Visa and Mastercard credit card fees, according to the Nilson Report, a massive increase from $33 billion in 2012. Credit card companies set the fees for merchants and have said the money helps cover fraud prevention costs, innovation and credit-card rewards program.
Smaller businesses sometimes offer discounts to shoppers who pay with debit card, cash or check. Some retailers won’t accept credit or debit cards for smaller purchases. While businesses try to fortify against interchange fees, they still risk losing out on a sale. Finance resource Spend Me Not reported less than 20% of shoppers carry cash.
Lawmakers have introduced legislation regarding credit card fees and their ripple effects. The Credit Card Competition Act aims to require big banks to offer a choice of networks for processing transactions, including one besides Visa or Mastercard, according to Yahoo! Finance.
Visa and Mastercard were not immediately available for comment.