The settlement reached between Visa, Mastercard, and merchants is valued at close to $30 billion, aiming to address the issue of swipe fees and provide relief to merchants who accept Visa and Mastercard credit cards.
Topics
Visa and Mastercard Settlement
The settlement reached between Visa, Mastercard, and merchants is a sum of $8.54 billion, comprising $5.54 billion granted in March 2023 to merchants accepting Visa and Mastercard payments from January 1, 2004, to January 25, 2019.
Furthermore, a distinct agreement finalised in December 2023 limits future swipe fees for seven years and provides injunctive relief, estimated to yield an extra $30 billion in savings for merchants.
Visa and Mastercard Settlement Amount
The Visa and Mastercard settlement has two key components regarding the total amount:
Financial Settlement:
- Amount: $5.54 billion
- Date Awarded: March 2023
- Eligibility: Merchants who accepted Visa and Mastercard payments between January 1, 2004, and January 25, 2019 (Claim period closed in May 2023)
- Distribution: Awarded to merchants who filed a claim within the deadline.
Reduced Swipe Fee Savings:
- Estimated Amount: $30 billion over five years
- Eligibility: All merchants in the United States who currently accept Visa and Mastercard credit cards.
- Action Required: No action is needed to benefit from capped swipe fees.
- Impact: Lower processing costs for merchants, potentially leading to lower prices for consumers.
- The $30 billion figure represents an estimate of the total savings merchants will experience due to reduced swipe fees over the five-year period.
- The actual amount saved by each merchant will vary depending on their transaction volume and the types of cards accepted.
Outcome of the antitrust suit against Visa and Mastercard
The outcome of the antitrust suit against Visa and Mastercard resulted in a settlement announced in March 2023, rather than a court decision. This settlement addressed concerns raised by merchants regarding excessive swipe fees charged for processing credit card transactions.
- Reduced Swipe Fees: The settlement caps swipe fees for a period of five years. This is estimated to save merchants a total of $30 billion over that timeframe. This benefit applies automatically to all merchants who accept Visa and Mastercard credit cards.
- Increased Negotiation Power: The settlement allows merchant groups to collectively negotiate fees with Visa and Mastercard directly. This could lead to further reductions in swipe fees in the future.
- Financial Settlement: An initial $5.54 billion was awarded to merchants who accepted Visa and Mastercard payments between 2004 and 2019. However, the deadline to claim a share of this amount has passed (May 2023).
Claiming the visa and MasterCard settlement
The steps to claim the visa and MasterCard settlement are:
- Wait for the Claim Form to be mailed to you, starting from December 1, 2023, on a rolling basis.
- Use the QR code provided on the Claim Form to access the secure website.
- Log in using the credentials provided on your Claim Form.
- You can submit your claim online at the official settlement website (www.PaymentCardSettlement.com) using the information from the claim form.
- Alternatively, you can fill out the paper claim form and mail it to the Payment Card Interchange Fee Settlement, PO Box 2530, Portland, OR 97208-2530, postmarked by the May 31, 2024 deadline.
- You will need to provide the estimated amount of your eligible Visa and/or Mastercard interchange fees paid during the class period (January 1, 2004 to January 25, 2019)
- The Class Administrator may need to validate the interchange fees you claimed, and you may be required to submit supporting documents.
Impact of the Visa and Mastercard Settlement on Merchants
The settlement between Visa, Mastercard, and merchants has both positive and potential negative consequences for businesses that accept credit cards.
Positive Impacts:
- Reduced Swipe Fees: The most significant benefit is the capped swipe fees for five years. This translates to lower processing costs for merchants, potentially improving their bottom line.
- Increased Negotiation Power: The ability for merchant groups to collectively negotiate fees with Visa and Mastercard could lead to further reductions in swipe fees beyond the initial caps.
- Greater Transparency: Merchants may be able to offer different pricing structures based on the swipe fee associated with each card. This allows for clearer communication about credit card processing costs to customers.
Potential Negative Impacts:
- Implementation Challenges: Implementing different pricing structures for various cards might require complex adjustments to point-of-sale systems and could create confusion for customers.
- Limited Fee Reduction Impact: Some argue the reduced fees may have a modest effect on final consumer prices.
- Focus on Smaller Merchants: Larger merchants with higher transaction volumes may benefit more from the settlement compared to smaller businesses with less bargaining power for individual negotiations.
Go to GMR Homepage To Get Relevant Content.