NEW YORK–Visa and MasterCard have agreed to a $30-billion settlement with U.S. merchants related to swipe fees. The settlement is to take place over five years.
According to terms of the settlement, Visa and Mastercard will cap the credit interchange fees into 2030, and the companies must negotiate the fees with merchant buying groups.
The settlement is part of a lawsuit originally filed in 2005 that alleged that merchants paid excessive fees to accept Visa and Mastercard credit cards, and that Visa and Mastercard and their member banks acted in violation of antitrust laws.
As CUToday.info reported earlier, in 2018 the two card companies agreed to pay $6.2-billion as part of a lawsuit that had been filed by a group of 19 merchants. But that lawsuit then had two pieces that need to be resolved: a dispute over the rules Visa and Mastercard impose to accept their cards, and the merchants who chose not to participate in the settlement, noted NBC News.
Mostly Small Businesses
In the new settlement, Visa said more than 90% of the merchants in Tuesday’s settlement are small businesses.
The changes will likely take effect in late 2024 or early 2025.
The settlement is subject to final approval by the Eastern District Court of New York.
Both Visa and Mastercard issued statements saying card rewards will not be affected.
NFIB Responds
Following the announced, Jeff Brabant, VP-federal government relations with the National Federation of Independent Business, issued a statement saying, “We are pleased that Visa has finally recognized that their anti-competitive practices have caused ‘true pain points small businesses have identified.’ While this settlement is a step in the right direction and will provide a limited amount of short-term relief to small businesses, it does not solve the long-term anti-competitive rate-setting practices that are the root of this problem.
“As long as the credit card networks, Visa and Mastercard, get to set the interchange rates for every bank that issues a credit card, anti-competitive pricing will remain, and small businesses will continue to pay artificially high rates,” Brabant continued. “Competition must be injected into the credit card marketplace to allow rates to be set by market forces, and that will only happen with the passage of the Credit Card Competition Act.”
The Credit Card Competition Act is opposed by credit unions.