Visa and Mastercard Settle Class-Action Lawsuit, Agree to Cap Swipe Fees
Visa and Mastercard have reached a class-action settlement to cap swipe fees charged to merchants, potentially saving them an estimated $30 billion over the next five years. Swipe fees, collected by Visa and Mastercard for processing credit card transactions and shared with issuing banks, have long been a burden on merchants, who pass the costs onto customers, potentially inflating prices.
The settlement stems from a 2005 lawsuit filed by merchants claiming they were paying excessive fees to accept Visa and Mastercard credit cards. In 2023, U.S. merchants paid a total of $101 billion in fees, including $72 billion in interchange fees. These processing fees have continued to rise as consumer spending has shifted to credit cards over the years.
The profits generated from these fees have been a boon for big banks and have indirectly funded credit card rewards programs. Despite the settlement, these rewards programs are not expected to be affected. The agreement is still subject to court approval.
This development could have a significant impact on the way merchants conduct business and could potentially lead to lower prices for consumers. Stay tuned for more updates on this story as it unfolds.
“Social media scholar. Reader. Zombieaholic. Hardcore music maven. Web fanatic. Coffee practitioner. Explorer.”