Meeting the $5 dollar credit card minimum... You added extra oat milk to your cold brew, swiped your card, and walked out of the store with your caffeine. But what went on behind the spending scenes is way more complex. Merchants like your bodega and coffee shop pay $100B+ a year in interchange fees (aka "Swipe Tax") for your credit card usage. Now Visa's changing its fee structure for stores. Some background:
- Merchants' Cost: The coffee shop pays that Swipe Tax every time you pay with a card (usually ~1.8% of your payment). Enter, credit card minimums.
- Banks' Cut: Most of that fee $$$ ends up in the pocket of the bank that issued your card (Chase, Citi, etc.) — because the bank is the one actually paying the merchant and lending you the money via credit (aka, covering your latte).
- Network's Cut: A much smaller cut of the fee goes to the network that facilitates the payment, like Visa or Mastercard. They don't usually issue the plastic or credit, but they make sure money moves from your bank to your coffee shop (and that cold brew charge magically appears on your card statement).
Now, Visa wants to raise fees for some merchants... and cut them for others.
- Raise Fees: For non-swiping, ecommerce companies that you likely gave your credit card info to (think Amazon, DoorDash, and Uber).
- Lower Fees: For companies that require you pay by check to avoid the swipe fees (think real estate, like your monthly rent).
Visa's optimizing, not disrupting itself... It's milking more money out of your credit card purchases. That's why it's raising fees for no-brainer "I'll use credit" purchases, and lowering them where you don't typically swipe (like rent payments). Visa is the world's largest payments processor, but that doesn't mean merchants won't complain. Kroger even banned Visa cards in 2018 because of fees, before reversing the ban the next year.