Visa, MasterCard may raise debit card fees
Visa Inc. and MasterCard Inc. will raise debit card fees charged for small-ticket purchases to the full amount allowed under new rules, according to an analyst.
San Francisco’s Visa and MasterCard may increase fees from 8 cents on a $2 purchase to 23 cents, Thomas McCrohan, an analyst at Janney Montgomery Scott, wrote in a note. They will eliminate what is -called the interchange portion of the fee, charging the highest amount allowed by rules announced in June, McCrohan said.
The change “will kill the economics for small-ticket debit purchases and influence a shift back to credit cards,” McCrohan wrote. “It will almost certainly lead to a merchant revolt against the card networks.”
The Federal Reserve said June 29 that U.S. debit card transaction fees, mandated by the Dodd-Frank Act, can’t exceed 24 cents on an average transaction, replacing a formula that averages 1.14 percent of the purchase price, or about 44 cents.
Visa and MasterCard attempt to squeeze their customers even more. This may force retailers to put in place minimum transaction amounts for debit card usage. Not good.