Credit card networks settle longtime lawsuit with merchants

Visa and Mastercard on Tuesday said they had reached a settlement with merchants in the United States to reduce their credit card transaction rates. The agreement ends a longstanding class-action lawsuit and caps the two companies’ credit card transaction rates for the next five years. Visa and Mastercard will also simplify their surcharge rates on transactions and give merchants more options for handling them, according to their statements.

How did this come about? The lawsuit brought by merchants alleged antitrust violations by Visa and Mastercard that burdened merchants with excessive fees to accept payment from cardholders, according to a court-authorized website. Visa said in its statement that the agreement concluded nearly 20 years of litigation on the matter. The settlement is still subject to approval by the Eastern District Court of New York.

What do U.S. merchants have to say about this? The National Retail Federation on Tuesday said it harbored “very real concerns” about the settlement agreement. It said that the existence of the fees at all is an “unfair business practice.” The NRF said that while the settlement overall would be “among the largest in U.S. antitrust history,” the changes to the interest rates would be relatively small, amounting to “pennies on the dollar.”

Dig deeper: Read Kristen Waggoner’s column in WORLD Opinions about officials pressuring big banks to discriminate against those with conservative viewpoints.