Retailers and consumers beware. Both Visa and Mastercard are expected to jack-up card-swipe fees as soon as this month. Citing fraud as a reason for the fee escalation, the card companies believe they are more than justified in their actions.
However, as we’ll discuss in a moment, there may be a better solution to fraud than raising fees. This solution could keep consumers, retailers, and the card companies all happy.
Now, most card companies don’t charge swipe fees to consumers, instead they’re charged to retailers. However, it’s a fact of business that these fees are passed down to the consumer. It’s estimated that American’s already spend roughly $700 a year covering these pass-down swipe fees. Now, because of the actions by Visa and Mastercard, that cost is likely to rise.
Congress has taken notice.
Last week, four members of Congress (bipartisan) called for the halting of these fee increases, which would net the two companies about $1.2 billion, annually.
In a letter to the CEOs of both companies, the delegation said, “In 2021, according to the Nilson Report, Visa and Mastercard charged merchants a total of $77.48 billion in credit card fees and $28.06 billion in debit card fees. These fees… are ultimately borne by consumers in the form of higher prices for goods and services.
“Raising your interchange fee rates even higher will undoubtedly increase the already high costs consumers are facing and add to inflationary pressures, which is the last thing American families deserve right now.”
There’s already massive friction between the card companies, consumers and retailers over excessive fees and fraud. Raising swipe-fees will only lead to more friction.
Of course, fraud in the credit card industry is rampant, and must be properly addressed. You see, more than $28 billion was lost to credit card and identity frauds in just 2020. And over the course of the next ten years, the industry is expected to accumulate losses of over $400 billion.
But raising swipe fees is not the solution. The implementation of a more comprehensive fraud detection and prevention system by the card companies, is.
By utilizing a multi-layer AI-based fraud solution, like that custom developed by ToolCASE, card companies could better balance profits, consumer protections and customer satisfaction…
While reducing fraud.
And this could come, perhaps, without the need to raise swipe-fees at all.
Discover the multi-faceted Ai solution to transactional fraud HERE, at ToolCASE.com
Or, read more about Visa and Mastercard’s fee increase plans, HERE.
Source: https://qz.com/2157995/visa-mastercard-are-upping-merchant-fees/