A recent Senate hearing revealed that the network plans to increase fees for Visa credit card payments. Global Payments, the processor, announced this month that Visa plans to raise certain fees it charges banks and retailers for credit card payments on January 1st.
According to the letter dated October 10, the base transmission cost paid by financial institutions will increase to a quarter of a cent from 18% of a penny, while the abuse price paid by merchants using Visa will increase by two-thirds to 15 cents from 9 cents per transaction.
A misuse fee will apply to any transaction that is approved but not completed within a certain time frame.
Visa credit cards: Fees will be lower for American customers this year
Although the transmission fee is paid by the banks that issue the cards, the majority of fee increases are borne by businesses.
Effective January 1st, Visa’s U.S. digital commerce service fee will be based on authorized transactions rather than clearing and settlement, with no rate change.
The proposed fee increases coincide with pressure on Visa to reduce the fees it charges retailers when customers use credit cards to make purchases.
Depending on the volume of transactions, merchants, restaurants, and other businesses pay between 1% and 3% in interchange charges to accept card payments.
The fees are determined by the banks that issue the cards, and networks such as Visa may charge additional network fees.
Last week, the San Francisco-based company and competitor Mastercard, which controls the network sector, faced questions from the Senate Judiciary Committee regarding card payment processing fees.
Both Democrats and Republicans criticized the fees as onerous for retailers, especially small businesses, and urged them to update their systems.
Senators discussed the proposed Credit Card Competition Act, which aims to increase market competition by requiring a network other than Visa and Mastercard to process transactions.
During his testimony to the committee, Doug Kantor, who represents retail groups that support the proposed legislation, mentioned Visa’s intention to raise fees.
Kantor serves on the Merchants Payments Coalition executive committee and as general counsel for the National Association of Convenience Stores. According to Kantor’s testimony at the November 19 hearing, Visa will raise its fees once more in January.
Typically, networks only increase fees in April and October. He also stated that we are still considering another base fee increase that would affect financial institutions.
The Electronic Payments Coalition, which represents card issuers and networks, stated that interchange fees have remained stable at around 2% since 2017.
According to the EPC’s report, businesses have been paying roughly the same amount for credit card services for nearly ten years. Only when a company’s sales increased proportionately would a store or enterprise pay extra for transaction processing services.
Visa and Mastercard to pay more than $1,700 million in payments to its users
US courts ruled that credit card fees are unfair, requiring corporations to reimburse customers for years of unfair charges.
Users who paid non-refundable fees with Visa or Mastercard debit cards between October 1, 2007 and July 26, 2024 must also have had the fee levied by an ATM network, such as Bank of America, Chase, or Wells Fargo.
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