Merchants land credit card settlement
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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.
