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Visa and Mastercard are about to pay the hiking fees they charge merchants who accept credit and debit cards.
According to the Wall Street Journal, they could increase fees that they charge merchants as early as the month of April.
While giant credit card processors predict that the move will help them tidy up their financial coffers, merchants could be driven out. The crypto space is behind the scenes, where payments in Bitcoins are much less expensive to process.
Some event observers told CCN that merchants have everything to gain from these higher fees.
Relentless costs could backfire
Some of the changes relate to interchange fees. Interchange fees are what merchants pay to banks when consumers use a credit or debit card to make purchases.
According to the WSJ, up to 2.5% of the prices of goods and services will cover card fees. It is up to the merchant to decide whether to transfer these costs to his clients. In many cases, they do it. This is done either by raising the prices of goods or services. In addition, they can ask customers to make minimal purchases.
Reuters reported that credit card companies have said in the past that their credit and debit cards typically generate more sales for merchants. The key word here is the "past".
This language has been widely used during the pre-Bitcoin era.
Merchants around the world have already fought against these processors for interchange fees.
Last year, Mastercard and Visa were among the financial institutions that had to pay out $ 6.2 billion to settle a lawsuit filed by merchants who accused them of violating federal antitrust laws. The giants forced shopkeepers to pay trial fees and forbade them to direct consumers to other payment methods, namely the lawsuit.
Critics argue against the nerve of the pair to even consider raising costs.
Take this tweet, for example.
This is not a very well thought out strategy to increase interchange fees. Why have not the current fees been reduced since no technological advances have been made in our archaic system? Https: //t.co/god4wXzjmf https://t.co/SYDMVBSSHf
– JBall (@jonathanball) February 15, 2019
What do merchants have to lose
Considering that this multi-billion dollar settlement has had little effect in reducing the inclinations of Visa and Mastercard, more merchants should consider alternatives.
The lower costs badociated with the acceptance and processing of Bitcoin payments make this space ideal.
Many merchants are eager to accept cryptos like Bitcoin as a means of payment. The nuances and volatility of cryptos are among the main reasons. However, the growing amounts of fees they have to pay Big Dogs in the credit card payment network space could ease concerns about Bitcoin's acceptance.
Mark Thornton, economist and author at The Mises Institute, said:
If Visa and Mastercard increase their fees, this will definitely benefit Bitcoin. The reason is that many companies have margins as thin as razors, so they might have a good reason to focus on Bitcoin.
Many companies do not accept American Express because its fees are higher and often suppress most business margins, Thornton said.
At first, I think some independent stores, Mom and Pop will try it. But in the long run, big chains could probably adapt and use more Bitcoins in greater numbers.
Merchants must convince consumers
The many nuances of cryptos, especially their volatility and lack of regulation, have made consumers unattractive.
Patrick Sells, director of innovation at Quontic, an adaptive digital bank, said that Bitcoin and other cryptos would be strengthened this year. He added that they would become more widely adopted by customers who do not bear the risk of uncertainty related to traditional currencies.
He said:
Although bitcoin price volatility needs to stabilize for real mbad adoption, it will become easier to use and predict that customers will use a payment method – possibly integrating it into the bank as an encrypted wallet. .
Sells emphasized how bitcoins can also be a valuable financial tool and offer financial freedom to citizens of authoritarian governments. He cited Venezuela and Colombia as examples. NCC announced earlier this month that the weekly volume of Bitcoin transactions in Venezuela had reached a new high.
The adoption of crypto by Americans is linked to the almighty dollar. The dollar has always been a stable currency, said Sells. Most Americans, therefore, had more trouble grasping the power of Bitcoin as a stable and secure store of value, he added.
When Visa and Mastercard officials look in their mirrors, they see bitcoin. With a daily trading volume of more than $ 8 billion, Bitcoin (BTC) is expected to overtake MasterCard, the world's second-largest credit card network, in volume, CCN reported.
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