Visa & Mastercard Settlement Update
A US judge has approved a Visa and Mastercard $38 Billion settlement.
The settlement is not final yet, but is a step forward for a 20-year legal battle between Visa, Mastercard, and 12 million merchants.
The two credit card companies agreed to lower interchange fees by 0.01% for the next five years.
Interchange fees are transaction fees that merchants pay to card issuer banks when a customer uses a credit or debit card.
Merchants would now have the option to accept different types of cards:
Commercial cards
Standard consumer cards
Premium consumer cards
The standard consumer card rate would also be capped at 1.25% for the next eight years as part of the settlement.
How does this impact you?
An “honor all cards” provision forced merchants to accept (or deny) all types of Visa and Mastercards.
Some retailers and businesses accepting credit cards could begin to refuse payments.
Many retailers have said “such cards are too popular with customers to reject” according to an article from Yahoo Finance, so this scenario is unlikely.
Businesses could then charge fees for paying with a certain type of credit card.
It’s important to note that nothing is finalized yet, meaning there is no need to worry since this story is developing (and has been for 20 years 😅).