Visa and Mastercard on Tuesday reached a landmark $30 billion settlement that will limit credit and debit card fees for merchants, with some savings likely to be passed on to consumers.
The antitrust settlement is one of the largest in US history, and upon court approval would resolve claims in litigation that began in 2005.
Merchants have accused Visa and Mastercard of charging inflated swipe fees, or interchange fees, when shoppers use their credit or debit cards.
Sellers were blocked from passing on the extra fees to shoppers using Visa and Mastercard — as opposed to those charging their purchases to American Express.
There have also been “anti-steering” rules in place that bar directing Visa and Mastercard customers toward cheaper means of payment.
Under the settlement agreement, Visa and Mastercard will reduce interchange rates by four basis points in the United States — and will not raise its swipe fees for at least the next three years.
For a period of five years, the average effective systemwide swipe fee for Visa and Mastercard must also be kept at least seven basis points below the current average rate.
Both card networks also agreed to remove anti-steering provisions.
Visa and Mastercard denied any wrongdoing in agreeing to the settlement, which does not require merchants to pass savings onto consumers.
“By negotiating directly with merchants, we have reached a settlement with meaningful concessions that address true pain points small businesses have identified,” Kim Lawrence, president of Visa North America, said in a press release.
Rob Beard, chief legal officer, general counsel and head of global policy at Mastercard, added in a statement on Mastercard’s website: “This agreement brings closure to a long-standing dispute by delivering substantial certainty and value to business owners, including flexibility in how they manage acceptance of card programs.”
Visa estimated that small businesses comprise more than 90% of the settling merchants.
The fee rollbacks and caps alone are worth $29.79 billion, according to court papers.
Representatives for Visa declined to comment beyond the company’s press release.
The Post has also sought comment from Mastercard.
In March 2023, the Manhattan federal appeals court upheld a related $5.6 billion class action settlement against Visa and Mastercard covering some 12 million merchants.
That settlement did not resolve what kinds of fees Visa and Mastercard could impose, and not all retailers were covered by it.
Upon the latest ruling, Joseph Stiglitz — a Nobel Prize-winning economist hired by the merchants as an expert — said in an affidavit included in the settlement that the agreement “greatly enhances merchants’ freedom to steer customers using the linchpin of competition — prices.”
The ruling could also lead to “very substantial” savings for merchants, Stiglitz added.
The settlement is still awaiting final approval by the Eastern District Court of New York.
With Post wires
