Visa, Mastercard reached an estimated $30 billion settlement to limit credit and debit card fees for merchants
Visa and Mastercard, as well as the banks that issue cards with them, have agreed to a $30 billion settlement over five years. This potentially ends nearly two decades of legal battles over the fees associated with credit and debit card transactions for U.S. merchants. The settlement will not be finalized until receiving approval from the U.S. District Court for the Eastern District of New York.
“We are pleased that Visa has finally recognized that their anti-competitive practices have caused ‘true pain points small businesses have identified,’” said Jeff Brabant, Vice President of Federal Government Relations. “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.”
The deal lowers and caps the fees charged by Visa and Mastercard, allowing small businesses to collectively bargain for rates with the payment processors in a similar way that large merchants do now. However, far more needs to be done to remedy the current swipe-fee situation.
“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,” said Brabant. “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.”
This settlement is in addition to a 2023 financial $5.54 billion settlement between Visa and Mastercard and 18 million businesses that accepted Visa or Mastercard during a 15-year period up to Jan. 25, 2019. Eligible merchants who received a claim form in the mail in December and January can claim a share of that settlement until May 31.
Take Action: Urge your elected officials to support the Credit Card Competition Act and lower swipe fees.
