SAN FRANCISCO - An article earlier this week in the San Francisco Chronicle traced the history of Visa in the debit card market, and reported that the company faces a substantial decrease in debit transaction fees in light of the recent federal financial reform bill, the San Francisco Chronicle reports.
Last year, merchants paid roughly $20 billion in fees related to Visa and MasterCard debit transactions. While Visa does not collect debit transaction fees (those pass between the merchant and cardholder banks), its bottom-line depends on debit and credit card use, since it charges banks fees for the use of its Visa brand and card-processing network.
The swipe fee amendment allows merchants to offer customers incentives to pay with cash instead of plastic, as well as to set minimum purchase thresholds for using a debit or credit card. Such allowances had been effectively blocked by Visa through merchant agreements.
While debit card fees were modest when they became popular in the 1980s, after Visa joined the debit market in the 1990s, fees escalated quickly as their usage increased.