Mastercard and Visa are planning to increase fees they charge U.S. merchants for processing transactions, starting this April. The two card companies, which are the largest merchant banks in the country, say that their debit and credit cards help merchants to sell more especially in countries such as the United States and that the expenses for ramping up anti-fraud/theft security measures need to be covered. Up to 2.5 percent of prices of goods and services go to cover card fees.
They intend to increase interchange fees or the amount of fees paid by merchant to merchant banks when consumers use a credit or debit card to purchase from their stores. Also set to increase are fees charged by these card companies to merchant banks for processing card payments on behalf of merchants. Merchant banks maintain accounts for sellers such as Amazon and Costo and they include JPMorgan, Citigroup and Bank of America in U.S.
The news came on Friday last week from a report by Wall Street Journal, which also quoted a Visa spokesperson who confirmed that the hike in fees would take effect in April this year, but only for merchant banks and not merchants. The two were recently ordered to pay over $6 billion to settle a lawsuit brought by merchants who accused them of violating federal antitrust laws by forcing merchants to pay swipe fees and preventing them from directing consumers to pay using other methods.
Are crypto payment options better for merchants?
Not clear about whether merchant banks would pass the hike to merchants who would then pass the hike to customers resulting in higher transaction costs on card networks. Once the two increase the fees, it is up to the merchant banks to decide to absorb the cost or pass it to their customers. The hike of fees may stir another wave of debate regarding crypto payments and whether more merchants should take that option.
Comparatively, crypto payments can be very cheap these days especially with atomic swaps and Lightning Network technologies. For instance, a Bitcoin payment could now cost around $0.45 and LTC just 3 cents compared to up to $8 a person can pay when using the card networks.
For a $200 transaction, eMerchantBroker.com would charge around $8.25, Stripe around $6.1, Square $5.5, PayPal $5.4 and National Processing and Helcim around $4.3. However, despite the high costs, there are other issues that could be preventing merchants from adopting crypto payments although more merchants continue to integrate crypto payments as an alternative or additional option. The number of merchants accepting cryto has been increasing although its not yet popular option with masses. Besides low fees of transactions, today it is much easier to accept crypto and swap for other crypto or for USD or other fiat easily, sometimes without transferring the money from the receiving wallet. It depends on the payment platform or integration you choose.
Not only is it possible to act in time against volatility of prices between the time crypto is received and the time you withdraw, it is also possible to nowadays receive payments and manage them better via mobile phone apps or via POS integrations. With some platforms, you just set up to automatically convert and receive payouts in fiat to your bank account. There are also POS and other options for those accepting payments offline. But we should not imagine an immediate switch to crypto by all merchants because Visa and MasterCard and other card networks still offer better convenience needed by many merchants in managing their money and outlets and crypto payment gateways are not accepted by very many people like these networks right now. That's what many would like to pay more for.
According to an announcement made last year, over 2.7 million merchants can receive peer-to-peer BTC, ETH, LTC payments for purchases via Coinbase, following integration of them via commerce plugin integrations such as Shopify, WooCommerce and PrestaShop. Therefore, crypto payments are not a new thing and many are doing them comfortably.
However, regardless of this high number of integrations, only about 2,000+ had started to accept payments by August last year according to Coinbase. There are many other websites and POS apps that allow merchant to receive a variety of crypto and altcoins as payment for their goods and services.
Cryptopayments.net, which lets merchants receive payments in over 1200 coins, only charges 0.5% and is helping over 2.3 million vendors across 182 countries who integrate the payment plugin via website shopping carts such as Shopify and Magento. It also provides a Point of Sale for simple interface for in person transactions. It also provides a vault and merchants can accept and access their payments and convert them to other crypto and fiat on Android and iOS applications. Therefore, merchants do not even need to move their coins from the multi-coin wallet before making conversions.
United States and Euro merchants can do fiat settlements directly to their bank accounts. Some options connect to prepared card networks to let merchants spend crypto at ATMs and outlets that accept Visa and these cards, but others do not have cards. With Coinpayments.net, merchants can even chose to convert and hold their received crypto into stablecoin GeminiDollar or GUSD, thus avoiding fluctuation of value of their holdings after receiving from customers and before they can withdraw to fiat.
BitPay is also based in U.S. and has been operating since 2011 and has now processed more than $2.8 billion according to their websites. Last year, they processed over 1 billion USD in payments, meaning in 2018 alone. It allows merchants to accept more Bitcoin through more than 40 integrations with popular e-commerce platforms and POS systems and to convert it into 8 fiat currencies to receive them in their bank accounts. Merchants can also use their POS app to accept crypto at the store. It works for 38 different countries. It charges 1%. It had over 10,000 merchants as early as 2013 and now hundreds of thousands of merchants use it.
The company also has a BitLicense issued by New York’s Department of Financial Services (NYDFS) earlier last year. The BitPay card is connected to Visa and allows spending of received crypto on any ATM that supports Visa. Once a card is loaded with Bitcoins, it is ready to spend on ATMs instantly for online shopping or at retail outlets that accept Visa. With a debit card, you are able to receive payments and spend the money more easily. Of course, it is likely that crypto cards too that connect to MasterCard and Visa will be affected by price hikes.
CoinGate allows merchants to receive Bitcoin and Over 50 Altcoins in payments and receive payouts in Euros, U.S. dollars or Bitcoin in their bank accounts or other methods. The company, which has plugins for E-commerce, APIs, and point of sale applications, also integrated Lightning Network last year.
Among many other popular crypto payment gateway options include Blockchain.info, SpectroCoin which also has a prepaid card and allows for auto-conversion of BTC, Ethereum, NEM and Dash into fiat; GoUrl.io and CoinsBank.