I thought they might be fixing these fees for credit card transactions, but it doesn’t look like much. I get 2% back on my credit card purchases, which in reality is the credit card company giving me a kickback of the high fees they charge the vendor, which is ridiculous. And there are a few businesses and restaurants where we get cash discounts, indicating they charge cards more to cover the fees. so you’re in effect paying more and getting it back which is pointless. Consequently, I’d like to see more vendors accept Lightning Bitcoin payments which have super low fees, and there are several phone wallets and vendor systems that make it easy. Liquid Bitcoin is another Bitcoin layer 2 solution that would work similarly with good privacy. And settlement would be fast, with vendors having to wait for credit card payments, with wait time connected to fee percentage as I remember reading. Of course, they’re looking to replace all of this with stablecoins soon, so why no real effort to fix the system.
By AnnaMaria Andriotis
Visa and Mastercard are nearing a settlement with merchants that aims to end a 20-year-old legal dispute by lowering fees stores pay and giving them more power to reject certain credit cards, according to people familiar with the matter.
Under terms being discussed, Visa and Mastercard would lower credit-card interchange fees, which are often between 2% and 2.5%, by an average of around a tenth of a percentage point over several years, the people said. They would also loosen rules that require merchants that accept one of a network’s credit cards to accept all of them.
A deal could be announced soon, the people said, and would require court approval in order to take effect.
If an agreement is finalized, consumers could see big changes at the register. Merchants that accept one kind of Visa credit card wouldn’t have to accept all Visa credit cards, for example. Under the current talks, credit-card acceptance would be divided into several categories including rewards credit cards, credit cards with no rewards programs, and commercial cards, the people familiar with the matter said.
Some stores might turn away rewards cards, which charge them higher fees and in recent years have become very popular with consumers. But stores that reject those cards would face the risk of declining sales.
The case dates back to 2005, when merchants sued Visa, Mastercard and large banks, alleging that they engage in anticompetitive behavior with interchange fees and acceptance terms.
In March 2024, the two sides reached a deal to lower interchange fees by around 0.07 percentage point on average over five years. The agreement would have created a little more flexibility for merchants that want to charge consumers extra when they pay by credit card, a practice known as surcharging. The judge overseeing the case rejected the deal. The new settlement being discussed also would involve surcharging, the people said.
One of the challenges in the case is the divide between attorneys for different factions among the merchants. The lawyers a judge chose to represent the merchant class group haven’t been on the same page in the past as lawyers representing big merchants and trade groups.
Friction between merchants and the networks has increased significantly since the case began, in large part because of the increase in interchange and other fees that merchants have been incurring.
A particular point of tension is the proliferation of rewards credit cards. The points, miles or cash back that consumers earn when they shop with credit cards are in part funded by the interchange fees the networks set and that merchants pay to banks when consumers shop with their credit cards. Premium credit cards, or those with more generous rewards programs, tend to charge merchants higher interchange fees.
Currently, merchants can’t deny accepting a Visa rewards credit card if they accept other types of Visa credit cards. Rewards cards, particularly the premium ones, have become more in demand by consumers in recent years. Banks at times upgrade their customers’ existing cards, meaning that it is possible those cards that currently don’t have rewards on them could fall into a rewards category in the future.
Consumers have already been impacted by the fight between the networks and merchants. More merchants, especially small businesses, in recent years have begun passing on the interchange fees they incur to consumers by surcharging them when they pay with credit cards.
In 2023, banks and other financial institutions that issue Visa and Mastercard credit cards collected $72 billion of these interchange fees, according to the Nilson Report, a trade publication. The settlement being discussed would lead to a decline in those fees for a certain number of years. Separate fees that the networks set and pocket, meanwhile, have risen in recent years.
Any settlement on credit-card fees and acceptance rules is unlikely to affect litigation that large merchants are pursuing against the networks and large credit-card issuing banks. In these cases, some of which are set to go to trial next year, big merchants are seeking monetary damages tied to interchange fees and acceptance rules.