In a landmark settlement, Visa and Mastercard have agreed to lower merchant fees for US merchants. The agreement, which is the result of a long-standing lawsuit filed in 2005, is expected to reduce swipe fees paid by merchants by $30 billion over the next five years.
The swipe fees that merchants pay when customers use Visa or Mastercard typically amount to around 2% of the total transaction. However, for premium rewards cards, it can go up to 4%. Under the settlement, these fees will be reduced by at least 0.04 percentage points for a minimum of three years. This will be a significant relief for merchants who have been facing high fees for decades.
Visa and Mastercard have assured that the rewards received by cardholders will not be impacted by the settlement, and Americans’ access to credit will not be restricted as a result either. Seth Eisen, a spokesman for Mastercard, confirmed that this was true and that there would be no changes to credit access or rewards programs for cardholders.
In related news, Discover and Capital One recently announced a merger that is set to create the largest credit card company in the country upon approval by regulators and shareholders. Following the announcement of the settlement, shares of Visa and Mastercard slightly increased as investors showed optimism about the potential benefits of lowering merchant fees.
This story is still unfolding, but it looks like things are finally starting to change for merchants who have been paying high swipe fees for decades. As more information becomes available, we will keep you updated on any further developments in this landmark case involving Visa and Mastercard.
