As first reported by The Wall Street Journal, Visa Inc. and Mastercard Inc. plan to increase the fees they charge merchants for processing credit card payments by more than $500 million according to a report from consulting company CMSPI. One possible consequence of these fee hikes could be retailers passing on this cost to you — the consumer — when you use a credit card for your next purchase.
If that happens, it makes it all the more important that you're getting the most from each swipe by using a credit card that earns you cash back, airline miles or other rewards. Here's what you need to know.
How do credit card processing fees impact you?
Credit card processing fees are fees that merchants pay credit card companies and financial services providers to authorize credit card transactions. These processing fees vary according to the transaction and the type of credit card. According to the CMSPI report cited by The Wall Street Journal, merchants could pay an additional $502 million each year in fees after the hikes in October 2023 and April 2024.
Behind-the-scenes card processing fees don't usually grab the attention of customers, but they can affect what merchants decide to charge you if you pay using a credit card. A 2022 study released by The Straw Group (an analytics company specializing in the payments industry) found 23% of small businesses charge customers paying with a credit card an extra fee.
These can come in the form of "convenience fees" that a restaurant might pass on to a customer who pays for lunch with a credit card (for example) or a surcharge an online retailer tacks on for any order that's paid with a card. According to the National Retail Federation (NRF), swipe fees cost the average American family over $1,000 each year.
Top credit cards that give you the most value for your money
While nobody can predict exactly how merchants will react to a fee hike, one possibility is that they raise the fee that they charge consumers for using a credit card. In that case, it will mean you want to make sure you're paying with a card that gives you the most value for your swipe.
CNBC Select ranked the Chase Sapphire Preferred® Card as one of the top travel credit cards available. It offers elevated rewards rates on travel and dining purchases with 5X points on travel purchased through Chase Travel℠, 3X points on dining, 3X points on online grocery purchases (excluding Target, Walmart and wholesale clubs), 2X points on all other travel purchases, and 1X point on all other purchases.
The card comes with a modest $95 annual fee and a large welcome bonus for new cardholders, which can be worth thousands of dollars in travel.
Chase Sapphire Preferred® Card
Rewards
Enjoy benefits such as 5x on travel purchased through Chase Travel℠, 3x on dining, select streaming services and online groceries, 2x on all other travel purchases, 1x on all other purchases, and $50 annual Chase Travel Hotel Credit, plus more.
Welcome bonus
Earn 75,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening. That's over $900 when you redeem through Chase Travel℠.
Annual fee
$95
Intro APR
None
Regular APR
21.49% - 28.49% variable on purchases and balance transfers
Balance transfer fee
Either $5 or 5% of the amount of each transfer, whichever is greater
Foreign transaction fee
None
Credit needed
Excellent/Good
Terms apply.
Read our Chase Sapphire Preferred® Card review.
If you enjoy cash-back and don't want a card with an annual fee, the Chase Freedom Unlimited®, is a great option whether you're looking to spend money at big-named companies or small local businesses. For no annual cost, cardholders earn 6.5% cash back on travel purchased through Chase Travel, 4.5% cash back on drugstore purchases and dining at restaurants (including takeout and eligible delivery service), and 3% on all other purchases (on up to $20,000 spent in the first year). After your first year or $20,000 spent, enjoy 5% cash back on travel purchased through Chase Travel, 3% cash back on drugstore purchases and dining at restaurants, including takeout and eligible delivery service, and unlimited 1.5% cash back on all other purchases.
Chase Freedom Unlimited®
Rewards
Enjoy 4.5% cash back on drugstore purchases and dining at restaurants, including takeout and eligible delivery services, 6.5% cash back on travel purchased through Chase Travel, our premier rewards program that lets you redeem rewards for cash back, travel, gift cards and more; and 3% cash back on all other purchases (on up to $20,000 spent in the first year). After your first year or $20,000 spent, enjoy 5% cash back on travel purchased through Chase Travel, 3% cash back on drugstore purchases and dining at restaurants, including takeout and eligible delivery service, and unlimited 1.5% cash back on all other purchases.
Welcome bonus
INTRO OFFER: Earn an additional 1.5% cash back on everything you buy (on up to $20,000 spent in the first year) - worth up to $300 cash back!
Annual fee
$0
Intro APR
0% for the first 15 months from account opening on purchases and balance transfers
Regular APR
20.49% - 29.24% variable
Balance transfer fee
Intro fee of either $5 or 3% of the amount of each transfer, whichever is greater, on transfers made within 60 days of account opening. After that, either $5 or 5% of the amount of each transfer, whichever is greater.
Foreign transaction fee
3%
Credit needed
Excellent/Good
Member FDIC. Terms apply.
Read our Chase Freedom Unlimited® review.
If you love food and enjoy cooking or going out to eat, the American Express® Gold Card earns a competitive 4X points per dollar spent at restaurants and 4X points at U.S. supermarkets (on up to $25,000 per year in purchases, then 1X). Terms apply.
American Express® Gold Card
Rewards
4X Membership Rewards® points at Restaurants (plus takeout and delivery in the U.S.) and at U.S. supermarkets (on up to $25,000 per calendar year in purchases, then 1X), 3X points on flights booked directly with airlines or on amextravel.com, 1X points on all other purchases
Welcome bonus
Earn 60,000 Membership Rewards® points after you spend $6,000 on eligible purchases with your new Card within the first 6 months of Card Membership.
Annual fee
$250
Intro APR
Not applicable
Regular APR
See Pay Over Time APR
Balance transfer fee
N/A
Foreign transaction fee
None
Credit needed
Excellent/Good
See rates and fees, terms apply.
Read our American Express® Gold Card review.
Bottom line
While there's no telling exactly how this fee hike will impact you as a consumer, it's possible that merchants will charge consumers more for using a credit card to pay for a purchase. Although there's no simple solution to abate this possibility, you can ensure that you're getting the most value out of your credit card by looking for perks that maximize each use.
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For rates and fees of the American Express® Gold Card, click here.
