Visa and Mastercard, two of the world’s largest credit card networks, have agreed to a $30 billion settlement over a longstanding antitrust case brought by merchants. The settlement aims to reduce the swipe fees that merchants pay when customers make purchases using their Visa or Mastercard. This reduction, amounting to $30 billion over five years, applies only to US merchants and is the outcome of a lawsuit filed in 2005.
However, the settlement is not yet finalized and requires approval from the US District Court for the Eastern District of New York. Even after approval, the case can be appealed, potentially leading to a protracted legal battle. Typically, swipe fees cost merchants 2% of the total transaction a customer makes, but can be as much as 4% for some premium rewards cards. The settlement would lower these fees by at least 0.04 percentage points for a minimum of three years.
In addition, Visa and Mastercard would be required to maintain the swipe fee rates that existed as of December 31, 2023, for five years. However, the National Retail Federation (NRF) has expressed concerns about the settlement, stating that the reduced swipe fees would amount to “pennies on the dollar” and would not significantly impact merchants.
The settlement also allows merchants to impose surcharges on customers, depending on the type of Visa or Mastercard they use. These surcharges could particularly affect cardholders who receive rewards such as cashback and airline miles, as these cards can carry higher swipe fees. Conversely, some cardholders could receive discounts on goods and services, as merchants would be able to negotiate deals with banks to promote the use of preferred cards.
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