Visa, Mastercard reach $30 billion settlement over credit card fees
(Reuters) — 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 Tuesday is one of the largest in U.S. history, and if it receives court approval would resolve most claims in nationwide litigation that began in 2005.
Merchants have long accused Visa and Mastercard of charging inflated swipe fees, or interchange fees, when shoppers use 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 — 0.04 percentage points — for three years and ensure an average rate that is seven basis points below the current average for five years.
Both card networks also agreed to cap rates for five years and remove anti-steering provisions.
The fee rollbacks and caps alone are worth $29.79 billion, according to court papers, and Visa estimated that small businesses comprise more than 90% of the settling merchants.
The plaintiffs' lawyers said Visa and Mastercard agreed to pay up to $170 million of their legal fees and expenses.
Visa and Mastercard denied wrongdoing in agreeing to settle.
The settlement came one year after the federal appeals court in Manhattan upheld a $5.6 billion class action settlement with Visa and Mastercard covering about 12 million merchants. Some merchants opted out of that settlement and are pursuing separate lawsuits seeking damages.
