Jonathan Stempel
NEW YORK (Reuters) – Visa and Mastercard (NYSE:) have reached an agreement worth about $30 billion to cap credit and debit card fees for merchants, with some savings likely to be passed on to consumers through lower prices.
The antitrust settlement is one of the largest in U.S. history and, if approved by the court, will resolve claims in a lawsuit that began in 2005.
Merchants have long accused Visa (NYSE:) and Mastercard of charging inflated swipe or interchange fees when customers use credit or debit cards and prohibiting them through “anti-regulatory” rules from directing customers to cheaper means of payment. .
Under the agreement announced Tuesday, Visa and Mastercard will cut interchange rates by four basis points (0.04 percentage points) in the United States for three years and cap rates for five years.
Both card networks also agreed to remove anti-steering provisions. They denied wrongdoing and agreed to a settlement.
The rollbacks and fee caps alone are valued at $29.79 billion, according to court documents, and Visa estimates that small businesses make up more than 90% of settlement merchants.
Joseph Stiglitz, a Nobel Prize-winning economist hired by the traders as an expert, said in written testimony that the agreement “significantly expands the freedom of traders to manage customers using the core of competition – price” and could have “very significant” consequences. savings for traders.
“Competition among sellers causes these cost savings to be passed on to buyers in the form of lower prices,” Stiglitz added.
Last March, a federal appeals court in Manhattan upheld the corresponding $5.6 billion Visa and Mastercard class action settlement that covered about 12 million merchants.
The agreement did not define what fees Visa and Mastercard could charge, and not all retailers were covered.