2024-03-26 19:04:28
NEW YORK –
Visa and MasterCard announced an agreement with US merchants regarding their card processing fees, which could save buyers billions of dollars.
Processing fees are paid to Visa, Mastercard and other credit companies in exchange for allowing transactions. In the end, merchants pass those commissions on to customers who use credit or debit cards. These commissions are calculated as a fixed fee plus a percentage of total sales, generally between 1% and 3%.
Increasingly, small businesses display signs near the cash register warning customers that they will pay more for the same merchandise if they don’t use cash.
Under the agreement announced Tuesday, Visa and Mastercard will cap credit interchange fees by 2030, and the companies will have to negotiate fees with buying groups made up of merchants.
The law firm that announced the deal estimated the value of the savings in processing fees at nearly $30 billion.
The out-of-court settlement stems from a lawsuit filed in 2005, which alleged that merchants paid excessive fees for accepting Visa and Mastercard credit cards, and that Visa and Mastercard and their member banks violated antitrust laws.
In 2018, Visa and Mastercard agreed to pay $6.2 billion as part of a long-running lawsuit brought by a group of 19 merchants. But the lawsuit had two parts that needed to be resolved: a dispute over the rules that Visa and Mastercard impose for accepting their cards, and the merchants who decided not to participate in the agreement.
Visa said Tuesday that more than 90% of the merchants in the settlement reached that day are small businesses, and that $15 million of the settlement will be allocated to providing information to merchants about the rule changes.
Mastercard did not acknowledge any misconduct, which was part of the settlement, and the changes will take effect upon approval of the settlement, which will likely occur in late 2024 or early 2025.
The agreement is subject to final approval by the Eastern District Court of New York.
Earlier in trading, shares of Visa and Mastercard were down less than 1%.
#Visa #Mastercard #reach #agreement #commissions