Visa and Mastercard have agreed to cut their US interchange fees in what the two companies hope will be a landmark settlement that merchants say will save them $30 billion over five years and end a long running and problematic legal battle for the companies.
The deal will require the payments companies to lower the interchange fees they charge sellers over the next five years and also allow merchants to charge different prices to consumers based on which credit card they use.
The agreement concludes an almost two decades long case brought by merchants that alleged the payment companies inflated payment processing fees.
The agreement, as well as including a reduction in interchange rates also includes a cap on these rates extending until 2030.
Merchants are currently able to charge an extra fee for consumers who use American Express cards, but Visa and Mastercard have blocked sellers from doing so for their users.
The settlement however does not include a requirement for merchants to pass on the savings from lower fees to consumers, a key element in the merchants argument for the payments companies to lower the fees.
Kim Lawrence, President of Visa North America, emphasized the importance of the concessions made in the settlement, stating that they address significant issues raised by small businesses.
Lawrence also highlighted that the concessions were made without compromising the safety, security, and innovation that consumers and the economy rely on.
“By negotiating directly with merchants, we have reached a settlement with meaningful concessions that address true pain points small businesses have identified,” said Lawrence.
Rob Beard, chief legal officer, general counsel and head of global policy at Mastercard, said: “This agreement brings closure to a long-standing dispute by delivering substantial certainty and value to business owners, including flexibility in how they manage acceptance of card programmes.”
The post Visa and Mastercard end long running US interchange fee battle appeared first on Payments Cards & Mobile.