Visa, Mastercard reach $30 billion settlement

NEW YORK:

Visa and Mastercard reached an estimated $30 billion settlement to limit credit and debit card fees for merchants, with some savings likely to be passed on to consumers through lower prices.

The antitrust settlement announced on Tuesday is one of the largest in US history, and if it receives court approval would resolve most claims in nationwide litigation that began in 2005.

Some critics believe it may not go far enough, saying the savings would be temporary and fees would remain high. Merchants have long accused Visa and Mastercard of charging inflated swipe fees, or interchange fees, when shoppers used credit or debit cards, and barring them through “anti-steering” rules from directing customers toward cheaper means of payment.

Swipe fees typically include small fixed fees plus a percentage of total sale amounts, and average about 1.5% to 3.5% per transaction according to Bankrate.com.

Under the settlement, Visa and Mastercard would reduce swipe rates by at least four basis points for three years.

Published in The Express Tribune, March 28^th, 2024.

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