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Mobile payments are steadily becoming the largest method of credit card transactions in today’s economy. Apple Pay, Google Wallet, and Samsung Pay offer the simplicity and ease of use for a consumer to make a purchase. “It just works.” However, consumers are usually unaware of what happens to the business accepting their purchase. Mobile payments require business owners to pay fees for each mobile payment. And these fees are increasing.
Visa and MasterCard adjust their fees biannually; once in April, and once in October. Because of Covid-19, the scheduled rate adjustments were delayed; the April rate adjustment was delayed to July 2020. Some merchants might see the fees they owe decrease. As it turns out, a majority will experience an increase. This stems from the ever-growing amount of reward and cash-back cards.
According to CardX, face-to-face transactions represent the second largest operating expense for retailers, next to payroll. With a newer rate structure being introduced in July, consumers can anticipate a few benefits. Businesses will begin to offer a better rewards programs in an effort to promote more card usage, and more spending.
It’s uncertain if the July 2020 fee restructure will benefit or detriment retailers and/or small business. The fees that businesses pay can increase. However, consumers will spend more if they are offered a better reward structure.