Visa/Mastercard to Raise Fees

Market Overview
Read time 1.1 minutes

Year To Date Performances:

1. Job growth stumbles, but Wall Street smiles: US job additions fall short of expectations, easing Fed rate hike fears. In August, the U.S. economy added only 177,000 private-sector jobs, missing the projected 194,000 and marking a significant dip from July's upwardly revised figure of 371,000. This marks the lowest job growth since March, aligning with Tuesday's JOLTs data, which also showed a slowdown in labor demand. Wage growth for both job-switchers and job-stayers declined, falling to rates not seen since mid-to-late 2021. Yet, financial markets found a silver lining in the disappointing jobs report, interpreting the sluggish growth as a reason for the Federal Reserve to hold off on rate hikes.

2. Get ready to feel the pinch when you swipe—Visa and Mastercard are hiking up merchant fees. Starting in October, merchants will see an increase in both network and interchange fees, which fund payment processors and issuing banks, respectively. For consumers, this could translate into higher retail prices as merchants pass on the additional costs. According to consulting firm CMSPI, this new change is set to cost merchants an extra $500 million annually, adding to the already staggering $90 billion paid to Visa and Mastercard last year. To put that in perspective, just a decade ago, that figure was around $33 billion.

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4. Headlines

   1. The government has revised the Q2 growth figures from their original 2.4% down to 2.1%.

   2. The Department of Health and Human Services has officially recommended that the Drug Enforcement Agency reclassify marijuana. It is still a Schedule 1 substance despite being “legalized” by certain states.

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