Find the best credit card offers online.Visa, a worldwide network leader in payment systems for debit and credit cards, conceived of a controversial strategy started decades ago which has, in effect, caused clients to pay double in bank fees whenever a debit card receipt is signed in comparison to the fee levied when a 4-digit code is punched in by a customer.
At the expense of merchants and customers, Visa together with its partner banks, has benefited much from this strategy as higher fees translate into higher profits.
Higher-priced signature debit cards were embraced by banking partners and Visa took this as an incentive to issue more cards. MasterCard, however, opted to promote a less-expensive PIN debit card.
Visa expanded their market share by increasing fees, which in turn rakes in more profit for merchant banks.
Such practices have caused Mastercard and other companies to engage in a competition of raising fees rather than making it more affordable for clients.
According to the Nilson Report, Visa has a 73% share in the signature debit US market, while also having a 42% share in the growing consumer base of the domestic PIN debit market.
Seemingly, since many US retailers are dependent on a large amount of Visa holders, refusing to accept their cards would result in lower sales and revenues.
Service providers’ Global Head of Product, Elizabeth Buse, responded that this issue of providing convenience is worth the premium availed by its clients as well as providing higher sales for merchants.
Several critics claim that fees should not be “shrouded in mystery” and that credit service providers should not take advantage of opportunities to increase their prices at the expense of customers.
John Emling, Senior Vice President for Government Affairs of the Retail Industry Leaders Association (RILA) accuses the credit giant of operating “outside market norms.”
Emling said: “Visa arbitrarily and unilaterally determines the ‘value’ of card acceptance which results in excessively high rates that hurt retailers small and large…. For large retailers these fees stifle their ability to hire employees and reduce costs for consumers, for small retailers these fees can put them out of business.”
RILA is pressuring Congress to intervene and to initiate proactive changes to promote transparency and fairness in the system.
Moreover, the credit giant compels merchants to shell out an “interchange fee” every time a transaction is completed with a credit or debit card. This extra fee, which extracts about 1-3% per purchase, effectively promotes more cards to be issued since it is forwarded to the bank of the card holder for the purpose of covering costs.
