The credit card giants Visa and Mastercard, along with banks that issue cards using these networks, have reached a settlement to reduce merchant fees. This agreement comes after a lengthy antitrust case initiated by merchants against the credit card giants in 2005. The settlement is expected to decrease swipe fees paid by merchants for Visa or Mastercard purchases by $30 billion over a five-year period.
The case centered on lowering swipe fees that merchants incur during credit card transactions. Normally, merchants pay about 2% of the total transaction amount, with costs possibly rising to 4% for certain premium rewards cards. Under the settlement, these fees will be reduced by at least 0.04 percentage points for a minimum of three years. However, Visa and Mastercard cardholders will not see any changes in their rewards programs or credit access due to this reduction.
In response to the settlement, Visa and Mastercard confirmed that their rewards programs and credit access will remain the same for cardholders. Additionally, recent news of a potential merger between Discover and Capital One signals ongoing changes in the credit card industry. Despite this news, Visa and Mastercard stock prices experienced slight increases following the announcement of the settlement, indicating investor confidence in the deal.
It is important to note that the settlement is still awaiting approval from the US District Court for the Eastern District of New York and could be subject to appeal if it is approved. This story is still developing, and updates will be provided as more information becomes available.
