Mastercard and Visa agree to $30 billion settlement on credit card fees, reports Reuters

Mastercard and Visa agree to  billion settlement on credit card fees, reports Reuters

By Jonathan Stempel

NEW YORK (Reuters) – Visa and Mastercard (NYSE:) reached an estimated $30 billion deal to limit credit and debit card fees for merchants, with some savings likely to be passed on to consumers through to a drop in prices.

The antitrust settlement is one of the largest in U.S. history and, once approved by the court, would resolve claims in litigation that began in 2005.

Merchants have long accused Visa (NYSE:) and Mastercard of charging inflated swipe fees, or interchange fees, when shoppers use credit or debit cards, and of preventing them, through “anti- direction”, to direct customers towards cheaper payment methods.

Under the agreement announced Tuesday, Visa and Mastercard will reduce interchange rates by four basis points (0.04 percentage points) in the United States for three years and cap rates for five years.

The two card networks also agreed to remove anti-steering provisions. They denied wrongdoing in agreeing to a settlement.

The fee cuts and caps alone are worth $29.79 billion, according to court documents, and Visa has estimated that small businesses account for more than 90% of installed merchants.

Joseph Stiglitz, a Nobel Prize-winning economist hired by the merchants as an expert, said in a sworn statement that the deal “significantly strengthens the freedom of merchants to steer customers using the pivot of competition: prices”, and could lead to “very substantial” consequences. savings for traders.

“Competition among retailers means that these savings are passed on to customers in the form of lower prices,” Stiglitz added.

Last March, the federal appeals court in Manhattan upheld a $5.6 billion class-action settlement brought by Visa and Mastercard covering about 12 million merchants.

This settlement did not address the types of fees that Visa and Mastercard could impose, and not all retailers were covered by them.

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