If reports published by leading mainstream media outlets such as Reuters and Wall Street Journal are to be believed, payment processing giants such as VISA and MasterCard are reportedly planning a hike in their transaction fees. The increased transaction fees are expected to be implemented with effect from April of 2019. If this is indeed true, this is expected to give Bitcoin and other cryptocurrencies a significant edge as their transaction fees are likely to be significantly lower than that of Visa and MasterCard.
Apparently, a spokesperson from VISA’s side confirmed to these media outlets that merchant banks will be experiencing a definite fee hike starting April 2019. These merchant banks include premier financial institutions like the Citigroup, Bank of America, JP Morgan etc. Together, these banks maintain the accounts of major retailers or sellers, including big shots like Amazon.
As per standard business practice, almost 2.5 per cent of the total value of goods and services bought and sold is used to account for these transaction fees charged by the payment processors. So, it is unlikely that the merchants will bear the brunt of the proposed hikes themselves. They will likely pass these on to the customers, making it more costly for them to purchase goods and services with Visa and MasterCard.
This development opens up the possibility that customers will begin to prefer paying in Bitcoins and other cryptocurrencies. Although Bitcoin does not exactly have super low transaction fees, with the implementation of the Lightning Network (LN), they have been reduced by a significant margin. According to researcher Kevin Rooke, it seems that the median cost of transactions over the Bitcoin blockchain is about $0.02.
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That amount is quite low compared to what it will be like with the proposed hikes in Visa and MasterCard. Moreover, other cryptocurrencies, that are really cheap to transact with, such as Litecoin etc. will possibly have an edge because of this hike.