Visa and Mastercard fees are way too high / by kevin murray

The ubiquity of credit cards so utilized in America is quite obvious, and the amount of debt that is held by Americans on their credit cards, is estimated to be at $1 trillion, and heading higher.  Those consumers that use credit cards but do not pay their credit card bill in full, each month, are subject then to the agreed upon interest rate for that credit so being provided to them, along with being on the hook for associated other fees, for being late, or for not making their minimum payment, and so on, when they fail to honor all the terms and conditions of that credit.  Additionally, from a merchant standpoint, each time that a credit card transaction is completed, they then have to pay a specific monetary amount, to the credit card company, such as Visa or Mastercard, which is structured around how much the merchant owes for fees that are designated as the interchange, assessment, and payment processing fees.  Because merchants must pay that fee in order to accept credit cards, that then represents, for them, the cost of doing business, which thus necessitates them charging a slightly higher price for the goods that they are selling in order to accommodate those fees.

 

When it comes to the business of credit cards, the biggest winners are Visa and Mastercard, of which, cnn.com, tell us that they “…dominate more than 80% of the US credit card market.”  Because, then, of that domination, Visa and Mastercard can pretty much charge whatever that they so desire to charge as fees, that will thus help these particular mega-corporations to make more money, because they effectively have no competition or meaningful legislation that will preclude them from doing exactly that.  Yet, it doesn’t have to really be that way, for other nations, have structured caps on credit card fees, and are far more robust in their regulation of the credit card industry.

 

In America, the credit card industry is essentially a duopoly, in which, quite frankly Visa and Mastercard don’t really compete with one another; and further to the point, most consumers cannot discern any difference between the two companies, and therefore use each of these cards, interchangeably.  Additionally, most consumers aren’t really familiar with the fees being charged to the merchant for having the flexibility to accept credit cards, and for the most part, don’t seem to readily care about such – not seeming to recognize that the higher the fees so being charged by credit card companies to merchants, then correspondingly the slighter higher prices that these merchants need to charge consumers in order to recover as much as possible the credit card fees so being imposed upon them.

 

The thing about Visa and Mastercard is that because of their domination of the credit card industry and because of the lack of meaningful governmental regulation of that industry, they have been able to make billions upon billions of extra dollars off of merchants and the consumers to those merchants, for essentially providing a convenience, to the general public.  Those fees, then, will continue to be unnecessarily high unless this government asserts itself by mandating lower fees, or by opening the door to actual competition within the industry.