NRF, RILA voice concerns about Visa, Mastercard $30B swipe-fees settlement

Visa and Mastercard reached an estimated $30 billion settlement with U.S. merchants regarding credit and debit card fees, but not everyone is happy about it.

The settlement, which is subject to court approval, would be among the largest in U.S. antitrust history and  would resolve most claims in nationwide litigation dating back to 2005.  However, some critics have voiced objections, saying that fees would remain high and the savings not permanent.  

Under the key terms of the settlement:

•Visa and Mastercard will roll back the posted swipe fee for every merchant by at least four basis points — 0.04% — for at least five years;

•For a period of five years, the two credit card giants will not raise the swipe fees of any merchant above the posted rates that existed as of Dec.31, 2023; and

•For a period of five years, the average effective systemwide swipe fee for Visa and Mastercard must be at least seven basis points below the current rate.

The settlement would also give merchants more choice in how they accept digital payments, including allowing them to steer customers to the merchants’ preferred payment methods and placing a surcharge on purchases made with credit cards.  Merchants would be allowed to adjust their prices based on the costs related to accepting different cards, while informing customers why some cards cost more than others.

The Retail Industry Leaders Association (RILA) called the settlement “a mere drop in the bucket.”

“It proves that merchants deserve injunction relief, but whether the settlement terms proposed are sufficient to remedy the hard caused by the current interchange systems needs to be carefully studied,” said RILA in a statement. “Leading retailers intend to study the terms of the settlement closely and reserve the right to object to the settlement deal if it comes up short on what merchants deserve.”

The National Retail Federation said it is still reviewing the proposed settlement, but has some “very real concerns.” 

“The reduction of just a few basis points is within the range that swipe fees have fluctuated over the years and amounts to pennies on the dollar,” Stephanie Martz, chief administrative officer and general counsel, NRF.  “The fact remains that these fees are an unfair business practice that harms merchants and consumers and benefits banks.”

Both RILA and NRF stated that the settlement should not interfere with Congress' passing of the Credit Card Competition Act, which would “bring true competition to a broken market,” said RILA.   

In agreeing to the settlement, both Visa and Mastercard denied wrongdoing.