During the coronavirus pandemic, Mastercard and Visa have seen their profits increase due to more consumers using card payments. However, campaigners have accused the firms of taking advantage of their market dominance and cashing in on the crisis.
According to a report by the British Retail Consortium, both firms have been charging “excessive fees” and are charging nearly twice as much as they were two years ago.
The BRC has warned that consumers could end up paying the extra costs faced by retailers, which comes at a time when many people are already struggling with credit card debt.
Are Visa and Mastercard abusing their position?
In the report, the BRC called for the government to take action against credit card giants. They are accused of consistently increasing fees, which they are able to do as they face very little competition in the market at the moment.
The companies have been the leaders in the industry for many decades now, and they continue to be two of the most profitable businesses in the world. Because of this, there’s very little that smaller retailers – or consumers – can do to challenge the rising fees.
Retail and hospitality trade groups have called for tough action to be taken on fees. In the current climate, in particular, more businesses have been forced to accept more card payments and avoid cash due to social distancing legislation.
The BRC added that “Complex billing structures have become a powerful tool to bamboozle political, regulatory or legal attempts to rein in increasing abuses of the schemes’ dominant market positions.”
“The costs that accompany acceptance of card payments represent yet another overhead for embattled small retailers,” added Martin McTague, national policy and advocacy vice chairman at the Federation of Small Businesses (FSB).
Mastercard and Visa deny the accusations
As criticism continues against the credit card companies, both deny that they are abusing their position or charging unfair fees to retailers or consumers.
In an interview with the BBC, a Visa spokesperson responded: “Visa enables millions of merchants throughout the UK to access the benefits of digital payments, giving them the ability to reach billions of potential customers both in their local communities and across the globe.”
“Visa has delivered to UK consumers some of the most secure and innovative payments solutions available anywhere in the world.”
A Mastercard spokesperson said: “We do not believe the BRC’s report represents the facts of the UK payments industry. The UK benefits from a highly competitive payments system designed for ease, simplicity and security for all those who make or receive a payment.”
“Digital payments are the most effective way of receiving and making payments for business and by their nature are significantly less costly than cash.”.