Visa and Mastercard are two of the most popular credit card companies in the world. They offer a variety of credit cards through global banks such as Citi. However, recently, both companies have announced plans to increase their processing fees for merchants that accept their cards. These fees will inevitably trickle down to you, the consumer, so here's what you need to know.
What are the fees for Visa and Mastercard cards?
Merchants pay a processing fee for every transaction that uses a credit card. This fee is paid directly to Visa, Mastercard, American Express or Discover, and each card has its own set fee structure. American Express typically has the highest processing charge while Visa and Mastercard often have the lowest.
Why are the fees changing?
Both Visa and Mastercard have announced that they will be raising their fees in April 2022. Both have cited the pandemic as the reason for increasing their fee structure. Both companies had previously held off any rate changes in 2020 and 2021 to help smaller businesses or those in industries hit particularly hard by COVID, like hotels.
Unfortunately, due to inflation and the increase in customers using credit cards instead of cash, credit card companies can no longer sustain their businesses with reduced processing charges.
How will this affect me?
Some outlets are incorrectly reporting the change will affect the fees directly associated with your credit cards. Any credit card you have is most likely run through a banking institution and directly through Visa or Mastercard, so any fees associated with your account, including credit cards with no annual fee, will not be affected.
You can expect a change in the price you pay to use your card at the register, though. Merchants will begin raising their prices to cover these new fees. Most vendors typically increase the cost of goods, but some will instead add a processing fee for transactions not paid with cash or a check. Separate processing fees are often only seen for electronic payments made online since it's easier for physical merchants to absorb the cost directly into the price they charge.
Either way, you can expect to be the one covering the increase in fees in one way or another.
What should I do to help reduce my share of these new fees?
There are a few ways you can mitigate these costs, but you should still expect to see an overall increase in price for the things you already buy.
1. Pay with cash or a check. This will only work with merchants who charge a separate processing fee for credit cards.
2. Rework your budget to handle the increased prices. You may need to adjust your spending categories or find a way to save money on the things you purchase.
3. Shop at discount or secondhand stores. This will help offset some of the costs associated with regular shopping.
4. Purchase from small businesses. These businesses are typically less likely to pass along the processing fees to their customers and are the companies getting hit the hardest by these new fees, so they need your support.
The bottom line
The fees for Visa and Mastercard cards are changing and the change will affect everyone who uses these cards. Be sure to plan your finances accordingly.
Press Release Service by Newswire.com
Original Source: Credello: What You Should Know About Visa and Mastercard Raising Fees
