Posted on 03/27/2024 5:33:29 AM PDT by Red Badger
Visa and Mastercard reach a historic $30 billion settlement, potentially reshaping merchant costs and consumer prices. Critics warn of fleeting relief.
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Visa and Mastercard, two titans in the payment industry, have reached a historic $30 billion settlement over credit and debit card fees, potentially altering the landscape of merchant costs and consumer prices. This resolution, aimed at curbing swipe fees for U.S. merchants, marks a significant moment in the ongoing battle over interchange fees that began in 2005. Critics, however, argue that the relief may be fleeting, with fees poised to remain high in the long run.
The Genesis of the Settlement
The litigation against Visa and Mastercard initiated nearly two decades ago, centered on allegations of inflated swipe fees and restrictive anti-steering rules. These rules prevented merchants from guiding customers towards less expensive payment methods. Under the proposed settlement, both card networks have committed to reducing swipe rates by at least 0.04 percentage points for three years, ensuring an average rate seven basis points below the current average for five years. Furthermore, Visa and Mastercard will cap rates for five years and eliminate anti-steering provisions, granting merchants greater freedom to offer discounts or impose surcharges on cards with higher interchange fees.
Reactions and Opposition
While some view the settlement as a victory for merchants, others, including retail industry groups and legal experts, criticize it for providing only temporary and insufficient relief. The National Association of Convenience Stores and the Retail Industry Leaders Association have voiced concerns that post-settlement, Visa and Mastercard could freely increase rates, lacking a mechanism to curb such hikes. Additionally, the settlement's approval process, expected to extend into 2025, and the potential for appeals, add layers of uncertainty to its eventual implementation and impact.
Broader Implications
The settlement not only promises immediate financial relief for merchants but also signals a shift in the dynamics of payment processing. It could stimulate legislative efforts, like the Credit Card Competition Act, aimed at introducing more competition into the credit card interchange fee market. Despite the settlement's limitations, it represents a step towards addressing longstanding grievances against payment giants and sparks a conversation about the future of merchant fees and consumer prices in the digital economy.
This landmark settlement underscores the complex interplay between merchants, payment networks, and consumers, highlighting the need for a balanced approach that ensures fair practices while fostering innovation in the payment industry. As the dust settles, all eyes will be on the actual benefits trickling down to merchants and consumers, and whether this agreement paves the way for more substantial reforms in payment processing fees.
Visa and MC are still a banking cartel that should never have been allowed.
So what happens when they push us into all-digital currency? Does the gov’t take over collecting fees on transactions? Or will there be no fees? Not likely, I would imagine.
I have two (2) single stocks in my portfolio and one of the is Visa (NYSE ticker V). Currently trading at $280/share. I buy $25 in fractional shares several times per month. I personally don’t use credit cards very much but I do use a debt card that is processed by Visa.
I steer my customers to cash with a very good explanation. They frequently listen. Try not to use the credit cards AT ALL. Helps my bosses and long-term helps me.
Used to see a lot of ‘DISCOUNT FOR CASH’ signs at checkouts.
They seem to have gone away...............
Usury is still fine.
Because more and more places are passing those fees on as “convenience fees”
What I am seeing now are businesses charging a 3% fee on credit card transactions, and waiving the fee for cash or checks.
Some places don’t take cash.
Gee: I wonder who will end up footing the bill for the $30 billion. /s
I just got junk mail bragging of a 29.99% interest rate.
“Used to see a lot of ‘DISCOUNT FOR CASH’ signs at checkouts.”
The whole selling point for retailers behind credit cards was that they alleviated the problem of handling cash. They were a paid for service for conveinence the consumer was willing to cover so they didn’t carry that cumbersome paper. And they could pay for everything with one fell swoop at the end of the month.
But as the credit card companies got greedy and started charging the merchants for the machines and forms that had to be passed on to the buyers, it got more and more expensive. And as consumers got lazy and didn’t pay off the bills on time they started accumulating interest which was okay until some of the cards went to over 20% of the balance. Everyone lost and the credit card companies won. And the consumers were trapped to paying the minimum for 25 years with no new charges just to get out from under water due to their irresponsibility or ignorance of what they were doing. Great, and I guess legal, ponzi scheme.
wy69
quote “committed to reducing swipe rates by at least 0.04 percentage points for three years”
this would explain why I got notice yesterday that my fees would be going up on my credit card processor. It is a scam, they raise the rates now and then agree to lower them over the next 3 years to back to where they were before.
The government was outsmarted again.
It’s just like those ‘FREE!’ Apple iPhones you see being advertised all over the TV and Cable channels, by the cellphone companies.
First, you have to have an ‘old’ iPhone, in good condition, to trade in!
You pay for the new iPhone up front, at a small discounted price, then the phone companies ‘reimburse’ you with ‘credits’ on your bill for the next two to three years/24-36 months. If you miss a payment, they will automatically charge your credit card for the full retail amount of the iPhone..............
Have you noticed that a lot of people think that Visa and Master Card are actually the one lending the money, holding the debt, servicing the debt and charging the interest?
Should not be ‘Allowed’?
By who? The government?
They are the ones who rigged the system in their favor...
Which is why it’s gone on for over 50 years.
Meanwhile the interest rates on credit cards are 20% to 30%....
20% for great credit scores!
The only way you get a break is to get 0% cards for 12 to 18 months but then your credit score goes down as it is a new card so no record...
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