Visa and Mastercard will roll out this feature to their US customers

Visa and Mastercard, the world’s two major credit card payment processors, announced Tuesday that they have reached an agreement with U.S. merchants to reduce collection fees charged every time a piece of plastic is swiped for payment from some customers.

by Money only

For a few years, especially during 2023, the controversy over the high travel fees charged by Visa and MasterCard processors has been growing. A Wall Street Journal report claimed that these companies would increase their profits through a controversial increase in the commissions they charge US merchants, which in turn reach consumers.

In fact, this is one reason why these definitions have sparked widespread discontent in the United States and other parts of the world. Focusing on the country only, more and more merchants are adding a flat fee of between 1% and 3% of the purchase value when a customer chooses to pay using a credit or debit card. They even added their own signs warning customers that they will pay more for the same products if they don’t pay with cash.

This social discontent has also been expressed in Congress, where lawmakers have attempted to promote laws regulating these abusive rates within the Credit Card Competition Act.

That’s why Visa and Mastercard announced they will cap credit interchange fees by 2030, with companies having to negotiate commissions with buying groups made up of merchants, according to the agreement announced Tuesday.

With this measure, it is estimated that merchants will save approximately $30 billion in processing fees.

The out-of-court settlement stems from a lawsuit filed in 2005 alleging that merchants paid excessive fees to accept Visa and MasterCard credit cards and that those companies and their banks violated antitrust laws.

In 2018, Visa and Mastercard agreed to pay $6.2 billion as part of a long-running lawsuit brought by a group of 19 merchants. But the lawsuit had two parts that needed to be resolved: a dispute over the rules Visa and MasterCard imposed for accepting their cards, and the merchants who decided not to participate in the agreement.

Visa explained on Tuesday that more than 90% of the merchants in the agreement reached that day are small businesses, and that $15 million will be allocated to provide merchants with information about the changes in the rules.

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