How Visa modified retail

Americans are increasingly using plastic to spend their money, which allows Visa to expand its dominance in the credit and debit card space.

According to a 2020 report by HSN Consultants, people in the US spent $ 6.7 trillion on credit and debit cards in 2019, 88% more than in 2009. More than 60% of those transactions were with Visa cards made.

This has helped Visa grow into one of the most valuable companies in the world. As of October 19, Visa has a market valuation of more than $ 491 billion. Shares, too, have risen more than 170% over the past five years.

However, some retailers argue that Visa’s success has come at the expense of the merchants who rely on them to process payments. Some have even said that the fees charged by Visa are too high for businesses to survive.

“I know a lot of business owners and it makes me sad because so many people accept it for what it is,” said Jared Scheeler, CEO of Hub Convenience Stores. “These prices are so ridiculous. The amount we pay in swipe fees is so high that we have to do something about it, someone has to do something about it.”

The swipe fees charged by Visa and Mastercard rose from $ 25.6 billion in 2009 to $ 67.6 billion in 2019, according to data from the National Retail Federation. The total processing fees US merchants pay for accepting all card payments rose to $ 116.4 billion in 2019, an 88% increase since 2009.

“This is a central part of the problem with their dominance,” said Doug Kantor, a board member of the Merchants Payments Coalition. “The exact way they were formed was to be that dominant price-setting entity, and the fact that this has been going on for so long is a problem for everyone else in the economy.”

Visa declined to comment on the story.

Of course, Visa advocates argue that the company is on the merchants’ side.

“Visas are, in a sense, a victim of their own success in the sense that they are so ubiquitous and so safe and so easy to use that people take it for granted,” said Lisa Ellis, analyst at MoffettNathanson. “Visa’s business structure is very balanced and when something is actually skewed, believe it or not, towards the merchants. They actually get most of their revenue from the banks and the ecosystem that supports the merchants.”

Watch the video to learn more about how Visa makes money.

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