Retailers could soon turn to cryptocurrencies to minimise costs as Mastercard and Visa prepare to hike up interchange fees fivefold.
Card giant Mastercard announced in January that from October 15 2021 it will dramatically increase interchange fees for UK customers now that transactions with the EU are deemed “inter-regional”.
Mastercard collects an interchange fee on behalf of banks every time a transaction is made using its cards, a small fee which is used to cover the costs of things like fraud prevention and systems maintenance to keep its card payment network running smoothly.
Analysts are now suggesting that retailers could turn to cryptocurrencies to keep the costs of transaction fees to a minimum.
While market-leading digital assets like Bitcoin and Ethereum have transaction fees similar or even higher than current interchange fees, many “altcoins” incur much cheaper costs for the merchants.
Meanwhile Mastercard has sought to cash in on the Bitcoin trend, announcing earlier this month that it would begin accepting select cryptocurrencies later this year.
It is the latest in a string of more traditional financial institutions jumping on the digital currency bandwagon, as the disruptive currency continues to push into the mainstream.
Last week the Wall Street Journal reported that the US’ oldest bank BNY Mellon would begin holding Bitcoin on behalf of its clients, marking a monumental shift in industry attitudes and providing a further boon for the currency.
According to new research from Crypto Parrot, searches for “crypto debit card” have surged almost 200 per cent over past year, peaking this month after Mastcard’s announcement.