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Credit Card Swipe Fees
May 21st, 2020

How Will The Credit Card Swipe Fees Hike Affect Businesses?

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There are dozens of ways to make payments today, ranging from ewallets, echecks and online wallets to credit/debit cards and online banking. Millions of users use these dozens of payment methods to shop, eat, dine, entertain and travel. However some of these payment methods are more popular than the others. A credit card for one is surely one of the most widely used payment methods. They are major modes of mobile payments, and are an efficient method of payment by themselves as well whether it is swiping, dipping or simply entering your credit card info onto a payment gateway/portal.

Ever since the coronavirus pandemic started, businesses have been suffering constant loss with no substantial hope in sight to recover. All they can do is wait for all this to get over. Although the CARES (Coronavirus Aid, Relief and Economic Security) Act has provided some relief to the small and medium businesses and is helping them sustain during these crucial times, it is certainly not enough to bring them to the same condition as they were in before the COVID-19 disaster. Adding to the woes, a hike in credit card processing fee is expected anytime soon. Earlier this fee hike was scheduled for the month of April but due to obvious reasons (COVID-19) the hike has been postponed till July 2020. The fee hike is mainly for credit card swipes, but it is going to affect all kinds of transactions made by credit cards in small or big ways.

The proposed hike is in the interchange fees, which is the fees charged to a merchant/business whenever a card is swiped by a customer to pay them. Change in credit card processing fees can come as a serious blow to many merchants, eCommerce businesses and even brick and mortar shops. Raising the fee may bring better rewards programs to the table for credit card users which will prompt them to spend and shop more but evidently businesses are already reeling under the COVID-19 shutdown and this might not be the best time for such hikes. If they get some time to recover, the fee hike can be adjusted an year later without causing severe damages. These businesses which have suffered a blow must be given some time to restart and stand back up. The fee hike in credit card swipe payments will undo the damage control being done by the CARES act and push these small and medium sized businesses back by miles.

VISA inc. is planning the biggest change in fee related to fees levied on merchants for swiping credit cards to receive payments. The interchange fee will change depending on the way a consumer pays for purchases. The rates could go up for eCommerce platforms whereas retail services in some sectors like education and real estate may witness a decline. The hike will most definitely affect the ‘card not present’ transactions apart from the swipe. Card companies are presenting this as a move to see better card acceptance by businesses, however this has two sides to the coin as businesses will move towards card payments, the ecommerce platforms who rely completely on online electronic payments will face the maximum loss.

It still remains to be seen as to what will be the actual implementation policy and thereafter the effect it has on businesses. It is also expected that the fee hike may be averted for a few more months. Whatever the case, this is going to bring significant changes in the credit card payments market and will be decisive to several small businesses out there.


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