Earlier we posted that Visa & Mastercard were nearing a settlement with merchants regarding a 20 year lawsuit regarding anticompetitive interchange fees and acceptance terms with merchants. An agreement has now been reached. The key points are as follows:
- Merchants don’t have to accept all Visa/Mastercards if they accept one of them. Instead there will be three tiers or buckets that can either be accepted or not:
- Commercial cards
- Standard consumer cards
- Premium consumer cards
- Interchange fees to be lowered by 0.1 percentage point for five years (averaged 2.35% in 2024)
- Ability to charge surcharges for accepting card payments up to 3%
- $38 billion settlement (up from $30 billion that was rejected by the judge in 2024)
Some merchant groups have slammed the agreement saying “You can’t just suddenly tell more than 80% of your card customers you’re not going to take their cards”, others state that it doesn’t agree concerns that District Judge Margo Brodie in Brooklyn, New York raised when rejecting the previous deal.
Our Verdict
I can’t really see many merchants not accepting ‘premium consumers’ as the category is so broad and includes most if not all rewards earning cards. Will be interesting to see if the judge approves this deal or not, my uneducated guess is that it won’t be accepted.
