By now, the entire world is well-aware of the term “swipe fees” or “interchange fees” that are used by credit card providers. The fees are a set amount or percentage that the credit card providers charge the customers for processing transactions.
For a very long time, there are two particular credit card service providers known as MasterCard and Visa that have been at the top of the industry. However, it is now being reported that the two credit card giants are now planning to increase the rates they apply per transaction.
This has caused a lot of concerns among the users and there is one particular question that is in every users’ mind. The question is whether there is an alternative for the current credit card providers and if the cryptocurrency industry is the answer to that question.
The first rumor around both the credit card providers emerged back in 2020 regarding the rates being increased for swiping fees. According to one of the major news reporting firms “Wall Street Journal” released a report surrounding the implementation of the new rates.
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The Wall Street Journal has revealed that both firms are now aiming to implement the new “high” rates in April 2021.
Although it may not affect the consumers directly the new update would definitely anger many merchants. It has been observed that most of the time, it is the merchants that incur the charges on behalf of the customers. Most of the time, the processing fees are around 2% that is paid by the merchants on behalf of the customers.
However, if the rates are increased then the merchants will have no choice but to impose charges on the customers directly. This would eventually cause a lot of concerns and would result in an enormous number of unhappy customers.
Once that happens, the consumers will eventually start looking for alternatives to the credit card options. The consumers would switch to different merchants or to an entirely different source for credit altogether. This is where the cryptocurrencies/digital assets come in and demonstrate their significance in the financial sector.
Although there are some cryptocurrencies in the crypto-verse that are known for high processing fees, most of the industry charges way less than what is being charged by Visa and MasterCard.
At present, Bitcoin (BTC) and altcoins based on the Ethereum (ETH) are known for observing high transaction processing fees. However, these platforms are now trying to lower the costs by introducing solutions such as Bitcoin Lightning Network and Ethereum 2.0. On the other hand, Visa and MasterCard seem to be okay with the idea of increasing the fees.
Apart from BTC and ETH, the majority of cryptocurrencies demonstrate very low transaction fee charges. This is why it is expected that the majority of the users leaving the two credit card giants would move to cryptocurrencies.