Following the publication of a study which showed New Zealand merchants paying more than merchants in Australia or the UK for credit card and the new contactless card transactions, MasterCard has responded back saying that card payment fees are unavoidable and unprofitable for the card network.
Commenting on the results of the study, MasterCard’s New Zealand country manager Peter Chisnall said,
“Interchange fees cover a range of costs borne by the card issuer including but not limited to interest free days, fraud prevention, bad debt and innovation. Interchange balances the costs consumers and merchants pay. MasterCard does not earn anything from interchange.”
As consumer use of debit, credit, and prepaid cards continues to grow globally, interchange generated by each transaction has become an increasingly important source of revenue. MIFs have allowed financial institutions around the world to develop popular reward programs and in many markets ensure that consumers have access to lower-cost banking and payment products.
While merchants will continue to make card networks like MasterCard look like the bad guys, the simple fact is that interchange plays an important role in the modern payments transaction value chain and without fees, other members of the value chain, including consumers are worse off in the end.
Overview by Tristan Hugo-Webb, Associate Director, Global Payments Advisory Service at Mercator Advisory Group
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