Americans with a Visa and Mastercard to pay $700 extra a year from this month as payment providers hike fees

HOUSEHOLDS with credit cards face higher costs from this month as Visa and Mastercard plan to hike fees.

On Monday, the National Retail Federation (NRF) urged the payment providers to cancel the scheduled swipe fee increases.

The estimated $1.2billion in fee increases were originally scheduled to take effect in April 2021, but they were postponed due to Covid.

Swipe fees, also known as interchange fees, are what merchants are charged each time a customer uses a debit or credit card.

According to the NRF, the fees drive up consumer prices, amounting to more than $700 a year for the average American family.

Leon Buck, NRF vice president for government relations, banking and financial services, said: "American consumers are struggling under the worst inflation in four decades and these increases would only make the situation worse.

"Swipe fees are a percentage of the transaction, so banks and card networks are already receiving an unearned windfall as they piggyback on higher prices."

The retail association added to The Sun it supports transparency and competition that would lead to lower swipe fees in the future, but that implementing them now would be ill-timed.

Lawmakers also agree with the NRF.

Last week, Senators Roger Marshall and Richard J. Durbin as well as Representatives Beth Van Duyne and Peter Welch sent a letter to Visa and Mastercard asking that they withdraw their plans.

The letter said: "Your profits are already high enough and any further fee increase is simply taking advantage of vulnerable Americans."

Swipe fees are most merchants’ highest operating cost after labor and average 2.22% of the transaction amount for Visa and Mastercard credit cards, according to the NRF.

Visa and Mastercard control roughly 80% of the credit card market.

The Sun contacted both companies for comment.

Mastercard told Fox Business: "Electronic payments play a critical role every day and have proven even more valuable since the start of the pandemic."

It added that the changes that will be made to a select group of rates are the first of their kind in more than a decade.

Mastercard also noted that it's decreasing costs for merchants with transactions that are below $5.

The Sun also explains how to build your credit score.

Plus, a money educator shares five ways to fix your finances including boosting your credit score.