The two biggest card networks are considering raising certain fees pertaining to transaction processing. One of the fees considering being changed is the interchange fee, the fee charged to merchants when consumers use a card at their business. Visa has said that these fees would only effect merchant banks such as JPMorgan, Bank of America, and Citigroup. The question then is whether or not this cost will be pushed on to the consumer. Logically, when fees are increased, companies then have to charge more for lost revenue. My question is if these fees are pushed on to everyday consumers, will it make people spend less money. The card companies have claimed that businesses that use their services get more business. Their justification for the fee increase is that they have increased their anti-fraud/ security measures significantly.
https://www.reuters.com/article/us-paymentprocessors-fees-idUSKCN1Q41ME
1 comment:
Josh, I find this quite interesting. With the rise in fees lately from banks, do you think this might push away consumers from using these specific banks? According to the Survey of Consumer Payment Choice, roughly 55% of consumers have "nonbank payment accounts", such as Amazon payments, ApplePay, GooglePay, Paypal, etc. do you think this gives consumers more of an incentive to use these types of accounts, over a traditional bank account?
Also, with the rise of blockchain tech, do you think this poses a potential threat to the traditional finance system? These digital currencies allow for much faster transaction and for a very small fraction of the total price. It will be interesting to see how digital currencies play out and shape into the modern economy within the coming years.
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