Are credit card fees going to rise and what does it mean for businesses?

2 November 2023 | 15 Shares

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At the end of August, the Wall Street Journal exclusively revealed that Visa and Mastercard were planning to raise the fees merchants are charged when customers use credit cards to pay. Depending on the payment processor, these fees may be passed onto merchants as a flat rate, as part of a tiered pricing model, or as the wholesale rate with a nominal charge on top, as in the case of Interchange Plus.

The WSJ saw documents and spoke with sources close to the matter who said the changes would largely apply to e-commerce sales and be instated in October and April. Consulting firm CMSPI told the WSJ that the rises could add $502 million a year to merchant costs. It added that while more than half of that will be due to changes in network charges, the rest will be provided by interchange fees, also known as swipe fees.

According to the WSJ, network charges – fees charged by the likes of Visa and Mastercard to facilitate transactions and maintain their payment infrastructure – are both set, and pocketed by, card companies. Interchange fees are the cost of processing a transaction and are paid by a merchant’s bank to the cardholder’s bank.

Network charges represent significant sources of profit for card companies, particularly Mastercard and Visa, which account for 99 percent of all card transactions worldwide. According to The Nilson Report – a globally recognized authority on card payments – merchants in the US paid around $93 billion in credit card fees to Mastercard and Visa in 2022. That figure was $33 billion a decade prior. This extra profit can, at least in part, be attributed to the rapid expansion of the e-commerce industry and the rise in convenient digital payment methods.

While the consumer may not even be aware of these credit card fees, they are important points of consideration for merchants when deciding their payment processor. Rate hikes can disproportionately impact SMBs, especially when they already struggle with inflation and higher interest rates. Unlike larger companies, they may not be able to absorb the cost and must pass it on to consumers by raising prices. This could erode their competitiveness and affect customer loyalty. Some businesses have tried to offset the transaction fees with cash discounts and credit card surcharges.


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Mastercard and Visa both disputed the Journal’s report shortly after publication. The former released a statement asserting that it has no plans to raise interchange rates or network fees in the US this fall. It also clarified that the fee for its Authorization Optimizer service, which the report said will be increased, is unrelated to interchange and only for the payment processor’s consideration. Visa stated that the article was “misleading,” maintaining its interchange fees have been constant for a decade and that it has introduced programs to lower them for small businesses in the US.

Nevertheless, there have been some recent changes that paint a different picture. Last year, Visa and Mastercard both increased their cross-border interchange fees for debit and credit card transactions by 0.1 percent and 0.35 percent, respectively.

At the time, the Payment Systems Regulator in the UK said it had not seen evidence that the costs of operating payment services have increased to warrant the fee hikes from card issuers. As recently as this month, there have been further changes to Visa’s interchange rates in the US and Mastercard’s in Canada that may impact payment processing fees. Visa’s changes include eliminating older international fees, fee increases for specific consumer interchange card products, and introducing a digital commerce service fee.

Mastercard is introducing a new pre-authorization fee and a fee for the Authorization Optimizer service mentioned in the WSJ’s story, which allows merchants to retry processing a card when a transaction fails. You can read about what this means in more detail here.

But changes being made to interchange fees aren’t going unchecked. In March, a US federal appeals court affirmed a $5.6 billion antitrust class-action settlement relating to interchange fees. It verified claims that Visa and Mastercard overcharged retailers with fees and stopped them from directing customers toward cheaper means of payment. Furthermore, a bipartisan bill known as the Credit Card Competition Act, reintroduced in June, seeks to empower merchants to process Visa and Mastercard payments through alternative networks.

Reports that swirl around potential hikes in interchange fees by Visa and Mastercard understandably raise concerns for SMBs about the impact on their bottom line and competitiveness. However, choosing a payment provider that prioritizes transparent pricing could remove much of the pressure. An example of such a provider is Helcim, whose commitment to a clear, fair pricing structure acts as a shield against unpredictable fluctuations in interchange fees.

With a model based on Interchange Plus, Helcim passes on the “wholesale” cost of the transaction plus a small markup, reducing the impact of fee hikes. If the wholesale price goes down, savings on the transaction are passed on to the merchant, which is not the case with a flat rate. Helcim has a track record of saving merchants an average of 25 percent compared to other payment processors, a significant financial relief in an environment of rising costs. In addition to Helcim’s transparent pricing structure, it provides merchants with discount tiers that progressively reduce markup as processing volume increases.

Helcim’s policy is for no hidden monthly or additional fees, adding a layer of financial security by ensuring businesses don’t face unexpected outlay.

When sending an invoice, business owners can also enable ‘Helcim Fee Saver.’ Here, the credit card processing fee is automatically passed on to the customer as a convenience fee. This offers a hassle-free way of saving on processing fees while ensuring the company abides by the complex rules on passing on their fees. Merchants using the Helcim Fee Saver save an average of three percent in processing fees.

With Helcim, merchants have access to a user-friendly platform, including in-house customer service support that offers personal help when businesses need a reassuring human touch in uncertain times.

Overall, Helcim provides a seamless way to process payments, whether it’s online, in-person, or both. Getting started takes just minutes and doesn’t involve any paperwork, contracts, or startup fees. Sign up for a free account today to begin safeguarding your business from fluctuations in credit card fees.