Fees also vary depending on where you shop. MasterCard has over 120 different rates for different categories of stores, explains Shawn Miles, head of global public policy for the company. Supermarkets, for example, pay one of the lowest rates, which they negotiated because their margins are so low. Online merchants, on the other hand, pay higher rates. Rewards cards come with slightly higher interchange rates, Miles says, but customers tend to spend more money on those cards, so they benefit retailers too. Visa's rates similarly vary by store and card type; the average interchange rate has held steady at 1.62 percent over the last decade.
The pending legislation could raise your fees. Several proposed bills would affect interchange fees by allowing merchants to charge customers extra for using credit cards, restricting use of plastic, or allowing merchants to collectively negotiate lower fees with card networks. Card networks and banks argue that if interchange fees were restricted, card issuers would be forced to raise fees in other areas. "You could see a reduction in the availability of credit cards and an increase in fees that are charged. . . . We do have costs that we need to cover, and those costs need to be addressed through the existing interchange process or though fees charged directly to the consumer," says Tim Keegan, chief financial officer at Wings Financial Credit Union in Apple Valley, Minnesota.
After Australia restricted interchange fees, the study funded by MasterCard found that annual fees charged on credit cards went up by 22 percent on standard cards and by 47 to 77 percent on rewards cards. "If you're no longer getting revenue from the merchant side, then cardholders will be paying for it," says MasterCard's Miles.
But if nothing changes, smaller merchants may decide to no longer offer credit card payment as an option, says Jusko. "For consumers to really be affected, though, one of the larger merchants would have to take a stand against fees by stopping the acceptance of credit cards," he adds.