Merchants pay between 1.5% to 3% of the total customer transaction in card swipe fees, according to the National Retail Federation
A federal judge yesterday officially rejected a controversial $30 billion swipe-fees settlement between Mastercard, Visa and retailers.
The deal would have capped fees these card giants charge merchants for credit and debit card purchases.
The agreement stems from a 2005 antitrust case filed by a group of retailers accusing Visa and Mastercard of conspiring with banks, inflating credit card swipe fees and blocking cheaper payment options.
Merchants pay between 1.5% to 3% of the total customer transaction in swipe fees. These could even go up to 4% for some premium cards, according to the National Retail Federation (NRF).
The proposed settlement would have lowered the fees by at least 0.04 percentage points for three years and decreased the average rate 0.07 percentage points for five years.
While some small businesses have supported the deal, trade groups like the Merchants Payments Coalition (MPC) and the Retail Industry Leaders Association (RILA) criticized the settlement as inadequate.
They say it doesn’t address concerns over continued price-fixing and competition blocking by credit card companies and only provides short-term relief.
MPC data shows that American merchants paid over $100.8 billion in credit card fees in 2023, up $7.5 billion from 2022.
Visa and Mastercard must now renegotiate with merchants or face a trial.