Visa and Mastercard Reach $30 Billion Settlement to Reduce Merchant Fees

Following a lengthy antitrust case, Visa and Mastercard have reached a settlement with banks that issue cards using these networks to reduce merchant fees. The agreement is projected to decrease swipe fees that merchants pay for Visa or Mastercard purchases by $30 billion over a five-year period.

The case, which was filed in 2005, focused on reducing the high swipe fees that merchants had to pay during credit card transactions. Merchants typically paid about 2% of the total transaction amount, with costs possibly rising to 4% for certain premium rewards cards. The settlement aims to lower these fees by at least 0.04 percentage points for a minimum of three years. Despite this reduction, Visa and Mastercard cardholders will not see any changes in their rewards programs, as stated by the companies.

In response to the settlement, credit card companies like Visa and Mastercard confirmed that rewards programs and credit access would remain the same for cardholders. Additionally, recent news of a potential merger between Discover and Capital One signals ongoing changes in the credit card industry. Visa and Mastercard stock prices experienced slight increases following the announcement of the settlement, indicating investor confidence in the deal.

However, it is important to note that the settlement has not yet been finalized and is awaiting approval from the US District Court for the Eastern District of New York. The case could also be subject to appeal, potentially extending an already long legal process. This story is still developing, and updates will be provided as more information becomes available.

By Sophia Gonzalez

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