Visa and Mastercard Reach Landmark Settlement in Decades-Long Swipe Fee Battle

Visa and Mastercard are finalizing a major settlement with merchants. This ends a legal fight that has lasted nearly twenty years. The deal was reported by The Wall Street Journal and confirmed by a source with direct knowledge.

The agreement will lower the fees stores pay to accept credit cards. It also changes rules that have long frustrated retailers. This could bring significant financial relief to businesses across the United States.

Details of the Swipe Fee Agreement

The settlement will reduce interchange fees by an average of 10 basis points. This reduction will be implemented over several years. According to Reuters, this is a larger cut than a previous proposal that was rejected last year.

The deal also loosens critical rules for merchants. Stores will gain more flexibility on which cards they must accept. They will also be able to add surcharges on Visa and Mastercard products.

Broader Impact on Retail and Consumers

This settlement has wide-reaching implications for the retail industry. Interchange fees total over $100 billion annually. Even a small reduction represents billions in savings for merchants.

The long-term effects on consumers remain unclear. Lower fees could potentially lead to lower prices. However, the ability for stores to add surcharges might mean new costs for some shoppers.

This resolution marks a pivotal shift in the payments landscape. The Visa Mastercard settlement finally addresses a core grievance for retailers. The outcome will reshape how card transactions are handled for years to come.

Thought you’d like to know

What are credit card swipe fees?

Swipes fees are charges merchants pay to process card transactions. They are also called interchange fees. These fees help fund cardholder rewards programs.

How much will fees be reduced?

The settlement lowers fees by an average of 10 basis points. This is a slight increase from the 7 basis points in last year’s rejected deal. The change will happen over several years.

What rule changes are included?

Merchants will no longer have to accept all cards from a network. They can choose to reject premium cards with higher fees. Stores can also add surcharges on certain Visa and Mastercard transactions.

Why was the previous settlement rejected?

A federal judge rejected last year’s $30 billion proposal. The judge ruled the credit card firms could offer more concessions. That deal would have saved merchants an estimated $30 billion over five years.

How long has this legal fight lasted?

The legal battle over swipe fees began in 2005. This was before Visa and Mastercard became publicly traded companies. The conflict has spanned nearly two decades.