Mar 26, 2024 - Economy

Merchants land credit card settlement

Illustration of a row of percent signs decreasing in size and thickness.

Illustration: Shoshana Gordon/Axios

Visa and Mastercard have agreed to cut and cap credit card processing fees as part of a major settlement with merchants after decades of litigation, Nathan writes.

Why it matters: U.S. businesses are expected to save at least $29.8 billion in the five-year deal, according to attorneys who represented the plaintiffs in the class-action settlement.

  • Merchants will have more flexibility to adjust how much they charge consumers for goods sold via credit card.

The big picture: Merchants, the vast majority of which are small businesses, currently pay an average of 1.5% to 3% per credit card transaction, according to BankRate.com.

  • U.S. merchants handed over $100.8 billion in credit card fees in 2023, up $7.5 billion from 2022, according to the Merchant Payments Coalition.
  • Those fee rates will fall by at least 4 basis points for the next several years, plaintiffs' attorneys reported.

Reality check: Not everyone's on board.

  • Doug Kantor, general counsel of the National Association of Convenience Stores, told the WSJ that the deal doesn't go far enough: "I would expect there to be a lot of merchant opposition to this settlement."

Zoom in: Merchants will be able to adjust prices of goods sold via credit card in 96% of transactions, up from less than 20% before the deal, according to plaintiffs' attorneys.

  • "This settlement achieves our goal of eliminating anti-competitive restraints and providing immediate and meaningful savings to all U.S. merchants, small and large," said Robert Eisler, co-lead counsel for the plaintiffs, in a statement.
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This story was an excerpt from Axios Closer, a recap on the day's biggest business stories.

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