MasterCard and Visa are making modifications today to some interchange fees, which are assessed when consumers use a credit or debit card to pay for purchases.

Interchange fees don't come out of consumer's pockets. The bank for the business that accepts payment made via credit or debit pays the bank that issued the consumer's card.

For example, when a Citibank-issued Visa card is used at a Target store, Target's bank pays Citibank an interchange fee.

MasterCard officials said they are bumping up their rates in part to stay competitive. Visa USA said only certain interchange fees will increase, while others may decline.

But retailers are worried that higher interchange fees could lead to smaller profit margins and higher prices.

''Profit margins in retail are only 2 percent,'' said Mallory Duncan, senior vice president and general counsel for the National Retail Federation. ''For small retailers, these numbers can be more than their profit margins.''

Critics also argue that any fee increase sets off a chain reaction as the cost of doing business is passed on to the retailer and then ultimately the consumer. But there is debate about that.

''There is absolutely no evidence of a relationship between interchange rates and the impact on prices consumers pay at the point of sale,'' said Daniel Tarman, a senior vice president at Visa USA.

Financial industry analysts have speculated that the increases are to keep American Express and Discover from taking away business by partnering with banks that issue credit cards by providing the banks with a higher revenue stream.

''Interchange revenue is sizable for issuing banks,'' said Stuart Weiner, vice president of payment systems research for the Federal Reserve Bank of Kansas City.

One estimate is that such fees amount to $17.4 billion annually.