As a result of a class-action settlement, credit card giants Visa and Mastercard will restrict “swipe fees” charged to merchants that accept their cards. This move could potentially save the merchants $30 million over the next five years.
Swipe fees are also known as interchange fees, which credit card companies collect in exchange for processing the transactions. The fees, which average 2.26% of each transaction, are typically passed onto customers, which inflates prices. The debate over these fees, and the resulting settlement, started back in 2005 when merchants filed a lawsuit claiming that they had to pay excessive fees to accept the credit cards.
In 2023 alone, merchants in the U.S. paid $101 billion in fees, including $72 billion in swipe fees, according to the Nilson Report. In addition to the cap on the fees, Mastercard and Visa will roll back the posted interchange fee for each merchant by at least 0.04 percentage points for at least the next three years. Additionally, the credit card companies will not increase fees about the posted rates at the end of last year for the next five years.
“This settlement achieves our goal of eliminating anticompetitive restraints and providing immediate and meaningful savings to all U.S. merchants, small and large,” Robert Eisler, co-lead counsel for the plaintiffs, said in a statement.
