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Consumers who charge purchases may not know it, but it's costing merchants more and more to accept plastic payments.

Both MasterCard International and Visa International hiked fees to process credit card payments earlier this month. The companies won't say how much they raised rates, but the Food Marketing Institute said MasterCard raised its fee 9 percent on a $100 purchase at a supermarket. Visa raised the processing fee for its own branded card by 36 percent on a $100 purchase at a supermarket, the institute said. The companies charge different rates depending on where the purchase is made and how much is charged.

Part of the reason for the increases is that MasterCard and Visa are facing increased competition from American Express and Discover cards. A 2004 U.S. Supreme Court decision said that MasterCard and Visa could not prevent financial institutions from also issuing Discover and American Express cards.

The credit card companies pay fees to banks and other institutions that issue their cards.

"If our issuers were going to issue American Express, it was because they would be attracted by American Express' higher fees," said Sharon Gamsin of MasterCard.

Those higher fees paid by the credit card companies are passed on to merchants who are charged more for the right to accept customers using the credit cards.

"The way this market works is they try to encourage banks to issue their cards by offering higher fees," said Bill Greer, director of editorial services for the Food Marketing Institute. "The competition is over increasing fees rather than decreasing fees. It's a substantial expense for merchants."

For convenience stores, credit card transaction fees were their fourth-biggest expense, costing more than utilities, according to a 2003 survey by the National Association of Convenience Stores.

And that cost has risen significantly in the last two years, said Jeff Lenard, the association's spokesman. Not only does processing a credit card payment cost more, but consumers are using plastic more.

"Because of the higher gas prices, there is an explosion in the use of credit cards," Lenard said. "In 2003, about half of all transactions were plastic. In the last couple of weeks, retailers are saying at least 70 percent are plastic. It's because of the higher gas prices. Instead of pulling out a $20, they're pulling out plastic to pay for a $30 or $40 fill-up."

Noco Express Shops has seen its cost for credit card payments increase 19 percent -- from about 5 cents a gallon to 5.7 cents per gallon. And Noco says it can't raise prices to compensate so the higher fees eat into its profits.

"To stay in business, you have to be competitive on your price," said Henry Bays, general manager. "Credit card costs are one of our largest expenses and now it looks like it will be even larger."

Cash is no longer king with consumers. Shoppers are charging 53 percent of their purchases, according to a study by the American Bankers Association. In 1999, they charged 43 percent.

Supermarkets are seeing the same trends as more and more customers charge their groceries, partly to earn rewards from the credit card issuers.

"Every year it's been rising, so I would think the trend would continue upward," said Mark Mahoney, operations manager at Dash's Markets. "We can't discourage them. There's too many options out there to shop."