US merchants who accept card payments are in a bit trouble as Visa and Mastercard plan to increase transaction fees, reported by Reuters. The promotions that come into force in April 2019 are likely to further damage the already fragile relationship between payment providers and merchants.
According to the sources, this increase of transaction fees will primarily affect the exchange fees that merchants pay their banks when they accept a card transaction. Even the fees that banks pay to Visa and Mastercard for processing payments will increase. The fees will rise in April but only for banks, a Visa spokesperson confirmed.
As anks are not known for their goodwill or lower profits due to cost absorption, they are likely to pass on these increases to vendors.
Even card companies are justifying their fees, arguing that security measures should be strengthened to prevent fraud and theft. Companies also specify that businessmen get more sales if they accept card payments.
In the fourth quarter of 2018, Visa’s net profit rose to $ 2.85 billion, an increase of 33% compared with the previous quarter. Similarly, Mastercard profit in the fourth quarter of last year rose to $ 1.9 billion, also exceeding $ 1.43 billion in the fourth quarter of 2017 by 33%.
Perhaps the fees is to be raised to cover a payment of $ 6.2 billion that the two companies faced after losing a US antitrust case. Or perhaps US fees should be increased to compensate for reduced profits (and not losses) in Europe due to antitrust investigations there. Although this money has already been set aside, entrepreneurs are preparing for the second round.
Now that Visa and Mastercard are throwing their weight into political debates, there must be a demand that merchants accept cryptocurrency payments. After all, if accepting card payments does increase total sales, accepting bitcoins does open up a completely new market.