A deal involving swipe fees that Visa and MasterCard announced with US retailers may save US consumers tens of billions of dollars.
In return for facilitating transactions, Visa, Mastercard, and other credit card firms receive swipe fees. Merchants charge those fees to customers who pay with credit or debit cards. The fees consist of a predetermined fee plus a percentage, usually between 1% and 3%, of the entire sales.
A growing number of small shops have started to place signs next to the register alerting consumers to the fact that if they don’t pay with cash, they will have to pay more for the same item.
Laptops 1000Visa and Mastercard will cap credit interchange fees until 2030, under the settlement announced on Tuesday. The corporations will have to bargain over the costs with merchant buying groups.
The savings in swipe fees, according to the legal firm that announced the settlement, are estimated to be worth about $30 billion.
The settlement is the result of a 2005 lawsuit alleging that member banks of Visa, Mastercard, and other companies violated antitrust laws by charging excessive fees to merchants so they could take their credit cards.
2018 saw an agreement between Visa and Mastercard to pay $6.2 billion in response to a protracted lawsuit brought by a group of 19 retailers.
However, two issues in the litigation still needed to be settled: the disagreement regarding the requirements Visa and Mastercard imposed for accepting their cards, and the refusal of the participating businesses to participate in the settlement.
Laptops 1000More than 90% of the merchants in Tuesday’s settlement are small businesses, according to a statement from Visa on Tuesday. A portion of the settlement, $15 million, would go towards educating retailers about the rule changes.
