Have you heard the news? Visa and Mastercard have increased the fees that merchants pay when they accept customers’ credit cards. These changes were delayed due to the pandemic, but now credit card companies are ready to ramp up the fees again, just as the US economy faces signs of a recession. According to McKinsey & Company, a survey of CEOs showed that 81% of leaders expect a recession. Many consumers are alarmed by the onset of inflation causing changes in consumer behavior and hurting corporate results. Analysts expect many consumer-facing industries to have a major downturn.
According to CMSPI, Visa increased fees by an estimated $698 million in 2021 and plans to impose an estimated $145 million in increases this year. Mastercard is moving forward with an estimated $330 million in increases that it put off last year. “These are the biggest interchange increases CMSPI has charted in at least a decade,” says a consultant at CMSPI. Merchants in the US paid more than $137 billion in processing fees in 2021, according to the Nilson Report, and this number continues to grow.
But what does this mean for US companies? Visa says the rate increase is designed to maintain high data quality and integrity across networks to prevent fraud. As businesses struggle to keep up with the cost of labor, fuel, and credit card fees, they have to decide what’s the best way to cover these costs. For many businesses, these higher credit card fees can mean higher prices for customers or even limits on the type of credit cards that they will accept. In the same article by McKinsey & Company, they suggest companies think about “more structural solutions that not only manage costs but also build resilience and can drive long-term value creation.”
How can Amaryllis Help You Improve Profitability During a Slow Down?
Amaryllis helps companies like yours create a new revenue stream from the payments flowing through your platform, which means you also increase your business valuation. Whether you need a complete, end-to-end payment platform, or a single functionality to round out your capabilities, our interchangeable modules allow you to implement only what you need, and nothing more. Through our modular solution, you can process credit card and ACH transactions, split fees and send payouts to your merchants. Best of all, with Amaryllis, there are no revenue sharing, no transaction fees, and no merchant onboarding fees, so you don’t need to raise prices on your customers.
You can shop around and negotiate the best processing rates possible with any acquiring bank or payment processor of your choice. You’ll get better rates as a payment facilitator with Amaryllis compared to competitors because you can demonstrate to the bank that you can underwrite merchants, manage risk, and monitor your business in accordance with the bank and card network rules – all by using Amaryllis All-In-One Payment Facilitation Platform.