Why PayPal Raised Its Processing Fees -- and Why It Could Backfire

PayPal (NASDAQ: PYPL) just announced that it will raise its processing fees for U.S. merchants. Starting on Aug. 2, the rate for each online PayPal or Venmo transaction will rise to 3.49% plus $0.49 -- compared to its current rate of 2.9% plus $0.30 for most online transactions.

However, PayPal's fees for in-person PayPal and Venmo QR code transactions will remain unchanged at 1.9% + $0.10 for transactions over $10, and 2.4% plus $0.05 for transactions under $10.

PayPal's stock rallied after the announcement, and several analysts lauded the decision as a sign of its pricing power. But could the decision backfire and leave it more exposed to competition?

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Source Fool.com