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

In a move to reduce merchant fees, Visa and Mastercard have reached a settlement with banks that issue cards using these networks. The agreement is projected to decrease swipe fees paid by merchants for Visa or Mastercard purchases by $30 billion over a five-year period. This settlement follows a lengthy antitrust case initiated by merchants against the credit card giants in 2005.

The case centered on lowering swipe fees paid by merchants during credit card transactions. Merchants typically pay about 2% of the total transaction amount, with costs possibly rising to 4% for certain premium rewards cards. The settlement aims to reduce 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 changes in their rewards programs, according to statements made by the companies.

Credit card companies like Visa and Mastercard confirmed that rewards programs and credit access will remain the same for cardholders. 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.

It is important to note that the settlement has not 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, extending an already long legal process. This story is still developing, and updates will be provided as more information becomes available.

By Samantha Johnson

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