| More rising costs for consumers
Inflation is at multi-year highs, and consumers are seeing higher costs everywhere. Even so, many people don’t carry cash most of the time when they go out. A pivot toward merchants looking for the greenback took me by surprise. Why the sudden need for me to hit the ATM?
Apparently, the two largest payment networks in the United States—Visa and Mastercard—raised their fees in April for many large merchants when their customers used credit cards.
The fee in question is the Interchange Fee, and it is charged to merchants and then passed along to the issuing bank of the credit card. While these fees are typically invisible to the consumer, the current economic landscape—inflation, supply-chain and labor woes—have many merchants passing part of that charge along to consumers.
The fees were discussed by the Senate Judiciary Committee earlier in May. During the hearing, senators from across the country lambasted the payment companies for raising fees as Americans were feeling the impact of inflation.
According to a U.S. trade association that represents some of the top retailers in the United States, America is home to "the highest and most complex fee credit card fee structures on the planet." There is a lack of competition and no place to turn—Mastercard and Visa control approximately 75% of total spending volume.
Consumers are already using alternate payment methods such as PayPal for their online shopping. Will the imposition of these additional fees also turn merchants looking to accept different payment rails? | 