Visa, Mastercard Will Lower Credit Card Fees — How It Benefits Businesses and Consumers
In an increasingly digital world and cashless society, more people are using credit cards for purchases than ever before. Over the past several years in particular, pesky credit card fees have become a sticking point for merchants and consumers alike.
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However, an agreement between two credit card giants and U.S. merchants in a two-year-long litigation is set to shake up the payments industry.
What Are Credit Card Fees?
USA Today explained that credit card fees are the interchange fees charged to the merchant to process your payment. Most of that fee is paid to the bank issuing the credit card. However, companies like Visa and Mastercard also receive a smaller fee for processing the payment through their networks.
The result? Higher overall costs for merchants and consumers.
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New Agreement Will Lower Credit Card Transaction Fees
On March 26, 2024, Visa and Mastercard, the two largest credit card issuers in the U.S., agreed to lower credit card interchange fees for merchants.
MarketWatch reported that Visa and Mastercard will lower published credit-card interchange fees by four basis points in the U.S. for at least three years. The two companies also won’t raise interchange fees for five years above the rates that were in place at the end of 2023.
Here’s what Visa and MasterCard senior leadership had to say:
“By negotiating directly with merchants, we have reached a settlement with meaningful concessions that address true pain points small businesses have identified,” explained Kim Lawrence, Visa’s North America president, in a recent statement.
Mastercard chief legal officer Rob Beard explained in a separate release that the settlement “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 programs.”
How Much Will Businesses And Consumers Save?
Overall, it’s estimated that the recent agreement will eliminate $30 billion worth of credit card fees over the next 5 years.
This will save businesses — and hopefully consumers — a significant amount of money in the coming years. It’s worth noting that the new rules will not take effect just yet, since the agreement is pending approval by the Eastern District Court of New York. If approved, the agreement likely won’t take effect until late 2024 or early 2025.
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This article originally appeared on GOBankingRates.com: Visa, Mastercard Will Lower Credit Card Fees — How It Benefits Businesses and Consumers
