Mastercard Inc. is reportedly planning to increase certain credit card fees charged to merchants from April 15 according to Bloomberg Law. This move comes just days after both Mastercard and Visa Inc. reached a $30 billion settlement regarding separate swipe fees, which was hoped to provide relief to retail businesses.
Mastercard’s upcoming fee increase, dubbed an ‘assessment’ fee, represents a hike to 0.14% from the current 0.13%. According to calculations by the Merchants Payments Coalition, this translates to an annual increase of $259.1 million, based on Mastercard’s AY 2023 transaction volume.
These assessment fees, charged to the retailer as a percentage of each Mastercard or Visa payment, are distinct from swipe fees or interchange fees, which are paid directly to the bank issuing the credit card. The recent $30 billion settlement between Mastercard and Visa was specifically aimed at capping swipe fees for a five-year period.
Despite this settlement, many retailers plan to take their claims regarding collusion on credit card fees by Visa and Mastercard to trial, in an attempt to secure additional financial relief. For further reading on the implications of this ongoing legal battle for swipe fees, see this article.
Mastercard’s spokesperson, Seth Eisen, has stated that the company informed banks last year about these impending pricing changes separate from interchange fees. He reiterated that these changes were aimed at ensuring that “people and businesses continue to have ways to pay and be paid that are hassle-free and worry-free, secure and most convenient for them.”
However, the proposed fee hike has raised concerns among retailers, who intend to challenge this increase, despite the recent settlement. The Merchants Payments Coalition has argued that these fee hikes often take a substantial toll on the bottom lines of retailers, often without timely notification or clarity on the implications of these changes.
Since 2011, Visa and Mastercard have instituted or raised fees on multiple occasions. It is yet to be clarified whether Visa also plans to increase its fees. As the two most common credit card payment networks in the US, Visa and Mastercard’s pricing decisions significantly impact both retailers and consumers alike.