Visa and Mastercard’s settlement with U.S. merchants over swipe fees could potentially save American shoppers billions of dollars. The agreement, which caps credit interchange fees and addresses long-standing grievances, particularly benefits small businesses and highlights efforts towards fairer transaction practices.
26 March 2024 – Visa and Mastercard have reached a significant settlement with U.S. merchants concerning swipe fees, a move that could potentially result in substantial savings for American consumers. The agreement, announced recently, aims to cap credit interchange fees until 2030, with both companies obligated to negotiate these fees with merchant buying groups.
Swipe fees, which are paid to credit card companies like Visa and Mastercard for transaction facilitation, have long been a point of contention for merchants and consumers alike. These fees, typically comprising a fixed fee plus a percentage of the sales total, are often passed on to consumers who use credit or debit cards, leading to increased costs for shoppers.
In response to the settlement, Visa and Mastercard have agreed to cap credit interchange fees and engage in negotiations with merchant buying groups, potentially resulting in billions of dollars in savings. The settlement, stemming from a 2005 lawsuit alleging excessive fees and antitrust violations by Visa, Mastercard, and member banks, addresses long-standing grievances within the merchant community.
Notably, the settlement prioritizes small businesses, with over 90% of participating merchants falling into this category. Additionally, $15 million of the settlement will be allocated towards educating merchants on the impending rule changes, reflecting a commitment to transparency and awareness.
While Mastercard did not admit to any improper conduct as part of the settlement, the changes are set to take effect pending approval, expected in late 2024 or early 2025. The settlement, subject to final approval by the Eastern District Court of New York, represents a significant step towards addressing merchant concerns and promoting fairer transaction practices.
In response to the settlement announcement, shares of Visa and Mastercard experienced marginal declines in early trading, underscoring the ongoing impact of these developments on the financial landscape. – ref: Associated Press
