If it receives court approval, it would resolve most claims in nationwide litigation that began in 2005. However, some opponents believe it may not go far enough.
Merchants have long accused Visa and Mastercard of charging inflated swipe fees or interchange fees when shoppers use credit or debit cards and barring them, through “anti-steering” rules, from directing customers toward cheaper means of payment.According to reports, swipe fees typically include small fixed fees plus a percentage of total sale amounts and average about 1.5 percent to 3.5 percent per transaction.Under the settlement, Visa and Mastercard would reduce swipe rates by at least four basis points (0.04 percentage points) for three years and ensure an average rate that is seven basis points below the current average for five years.Both card networks also agreed to cap rates for five years and remove anti-steering provisions.Merchants will have more discretion to offer discounts or impose surcharges on cards with higher interchange fees.Many already warn customers that at checkout that they will pay more using cards instead of cash.The fee rollbacks and caps alone are worth $29.79bn, according to court papers, and Visa estimated that small businesses comprise more than 90 percent of the settling merchants.In agreeing on the settlement, Visa and Mastercard denied any wrongdoing.In separate statements, Visa’s North American President Kim Lawrence said the accord addressed “true pain points” identified by small businesses, while Mastercard General Counsel Rob Baird said it offered “substantial certainty” to businesses.