Mastercard to increase credit and debit card fees

As seen by the Merchants Payments Coalition in documents, Mastercard aims to increase its Acquirer Brand Volume Fee, which currently applies to all credit, debit, and prepaid card transactions, also known as the assessment fee, from 0.13% to 0.14% beginning of 15 April 2024. As Mastercard secured nearly USD 2.591 trillion in transactions on those cards in fiscal 2023, the fees would amount to an annual raise of approximately USD 259.1 million. Additionally, both Visa and Mastercard are expanding other fees, however, not enough information has been provided to calculate the amount of them.

Furthermore, the Merchants Payments Coalition mentions that the current move is part of a pattern, with Visa and Mastercard raising or developing new fees that they go directly to them. Mastercard’s assessment fee increase represents the third round of raises in several combinations of interchange fees and network fee rates since 2021. Despite requests from Congress to withdraw the increases, both Mastercard and Visa raised them multiple times, with the current action bringing the total swipe fee rate to nearly USD 2 billion over the past three years. At the end of March 2024, the two companies announced their legal settlement with US merchants in a bid to decrease and cap their credit and interchange rates. At that time, Visa and Mastercard were set to lower credit card swipe fees by a minimum of four basis points for at least three years. However, the settlement applies to interchange fees only, while the assessment fee that Mastercard intend to increase is a network fee that goes to the company.

Considering that credit and debit card swipe fees represent the majority of merchants’ highest operating costs after labour, the fees are too high to absorb and increase consumer prices by over USD 1,000 a year for the average family. The announcement follows Senate Judiciary Committee officials' intentions to hold a hearing on the lack of competition over swipe fees, with them inviting Mastercard and Visa’s representatives to testify, however, both refused.

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