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Some retail industry groups have expressed their dissatisfaction with a recent settlement agreement between Visa, Mastercard, and a coalition of US merchants. The agreement, announced on Tuesday, aims to address long-standing grievances over credit card interchange fees by reducing and capping these fees, potentially saving merchants tens of billions of dollars over five years.
The settlement terms, awaiting approval by the US District Court for the Eastern District of New York, include a commitment from Visa and Mastercard to lower published swipe fees by at least 4 basis points for a minimum of three years. Additionally, they will not increase fees above their levels at the end of 2023 for the subsequent five years.
Steve Shadowen, co-lead counsel for the merchants said, “This settlement is the culmination of eight years of hard-fought litigation and detailed, painstaking negotiations. It provides comprehensive market-based solutions to too-high swipe fees, while providing immediate fee relief to merchants as they make these new competitive tools work for them.”
Despite these concessions, Stephanie Martz of the National Retail Federation and the Retail Industry Leaders Association have raised concerns, suggesting the reductions may not be sufficient to mitigate the harm caused by the current fee system.
Visa and Mastercard have defended the proposed settlement, arguing it offers meaningful concessions that will assist merchants, especially small businesses. Kim Lawrence, Visa’s North America president, stated, “By negotiating directly with merchants, we have reached a settlement with meaningful concessions that address true pain points small businesses have identified.” Mastercard’s chief legal officer, Rob Beard, echoed this sentiment, emphasizing the agreement’s provision of certainty and value to business owners.
