Visa and Mastercard agree to $30 billion settlement that will lower merchant fees//

//Visa and Mastercard agree to $30 billion settlement that will lower merchant fees//

Two of the world’s largest credit card networks, Visa and Mastercard, as well as the banks that issue cards with them, agreed to settle a decadeslong antitrust case brought upon by merchants.The settlement is set to lower swipe fees merchants pay when customers make purchases using their Visa or Mastercard by $30 billion over five years, according to a press release announcing the settlement Tuesday morning.The settlement, which only applies to US merchants, is the result of a lawsuit filed in 2005. However, nothing is considered finalized until it receives approval from the US District Court for the Eastern District of New York. Even then, the case can also be appealed in what could be a lengthy 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, according to the National Retail Federation. The settlement would lower those fees by at least 0.04 percentage point for a minimum of three years. Additionally, the settlement would require Visa and Mastercard to maintain the swipe fee rates that existed as of December 31, 2023 for five years.NRF, a trade group representing retailers, told CNN it has“some very real concerns” with the settlement.

The reduced swipe fees resulting from the settlement are within the range that they’ve fluctuated over the years and “amounts to pennies on the dollar,” NRF’s chief administrative officer and general counsel, Stephanie Martz, said in a statement.“The fact remains that these fees are an unfair business practice that harms merchants and consumers and benefits banks,” he added.

How cardholders will be impacted : Although merchants have long argued that swipe fees force them to charge higher prices, the settlement that would lower those fees, would not necessarily save consumers any money.That’s because the settlement gives merchants the ability to impose surcharges on customers who have Mastercard or Visa cards that allow them to rack up rewards such as cash back and airline miles.On the other hand, some cardholders could get discounts on goods and services since merchants would be able to make deals with banks to get them to use what they consider to be a preferred card.