As Visa and Mastercard raise fees, merchants may look to crypto


Credit card providers charge merchants a percentage of the payments they accept, known as interchange fees or swipe fees. With two major card providers aiming to raise fees, could crypto become an alternative?

“Visa Inc. and Mastercard Inc. plan to raise swipe fees on some types of credit card purchases in April,” The Wall Street Journal reported Wednesday, adding:

“Although invisible to consumers, they [interchange fees] are glaring to merchants, who often end up paying fees of about 2% of their customers’ credit card purchases. The fees are set by the card networks, such as Visa and Mastercard. Merchants pay them to the banks that issue the cards.”

As credit card fees rise, other options become more attractive to merchants. These include cryptocurrencies. Digital assets also incur transaction fees, but some may be a cheaper alternative than the current credit card scene, especially if card fees continue to rise.

Bitcoin (BTC) in particular has come under heavy criticism for its transaction fees, which seem to prevent it from ever becoming a viable payment method for everyday purchases. However, many completely ignore the costs that merchants incur when accepting payments via debit or credit card. There are also solutions like Bitcoin’s Lightning Network, which improves transaction fees and speeds for Bitcoin.

In March 2020, the global economy abruptly changed course as COVID-19 concerns and prevention measures took over. Many businesses reopened in various capacities. Credit cards, however, have continued to gain dominance over the use of cash, especially in light of those seeking web-based purchases given the current situation with COVID-19, as detailed by the Wall Street Journal.

Crypto assets are also paperless, can be used online and in person, and they can also come with other additional benefits, such as decentralization.

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