Visa and Mastercard agree to lower swipe fees
The companies will cap the fees they charge businesses when customers use their credit cards
What happened
Visa and Mastercard agreed Tuesday to cap the swipe fees, or interchange fees, they charge businesses when customers use their credit cards, and let merchants steer customers to cheaper means of payment. The lower fees will save merchants an estimated $30 billion over five years.
Who said what
Tuesday's settlement eliminates "anticompetitive restraints" and provides "immediate and meaningful savings to all U.S. merchants," said plaintiffs' lawyer Robert Eisler. "A few years of very small relief followed by business as usual is not a good outcome from 20 years of litigation," said Christopher Jones at the National Grocers Association.
The commentary
The roughly 2% swipe fees "may sound like pennies," but they add up to $72 billion a year, Bloomberg said. Merchants can now charge customers extra for using higher-fee premium Visa and Mastercard cards, though doing so may create "a lot of friction at the point of sale, for not that much gain," said Lulu Wang, an assistant professor of finance at the Kellogg School of Management.
Subscribe to The Week
Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.
Sign up for The Week's Free Newsletters
From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.
From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.
What next?
The landmark antitrust settlement needs court approval to take effect.
Create an account with the same email registered to your subscription to unlock access.
Sign up for Today's Best Articles in your inbox
A free daily email with the biggest news stories of the day – and the best features from TheWeek.com
Peter has worked as a news and culture writer and editor at The Week since the site's launch in 2008. He covers politics, world affairs, religion and cultural currents. His journalism career began as a copy editor at a financial newswire and has included editorial positions at The New York Times Magazine, Facts on File, and Oregon State University.
-
Italian mafia: why is murder and extortion going out of fashion?
Today's Big Question Move into tax evasion and money laundering means organised crime has 'not diminished but evolved', warns prosecutor
By The Week UK Published
-
Rishi Sunak's legacy: how the PM will be remembered
The Explainer 'Accidental prime minister' started with the 'weakest hand' of any British leader in the modern era
By Sorcha Bradley, The Week UK Published
-
State 'should fund weddings to combat loneliness', says report
Speed Read Married people are the least lonely, but report suggests the poorest are priced out
By Arion McNicoll, The Week UK Published
-
Downtown St. Louis is in a real estate 'doom loop'
Under the Radar The city is rife with abandoned buildings and vacant lots, with its real estate market in dire straits
By Justin Klawans, The Week US Published
-
How will the FTC's ban on noncompete agreements affect the workforce?
The explainer Short answer: Competition will only get fiercer
By Devika Rao, The Week US Published
-
American Airlines pilots are warning of a 'significant spike' in safety issues
In the Spotlight The pilot's union listed 'problematic trends' they say are affecting the airline's fleet
By Justin Klawans, The Week US Published
-
Why is Tesla stumbling?
In the Spotlight More competition, confusion about the future and a giant pay package for Elon Musk
By Joel Mathis, The Week US Published
-
Controversy is brewing over a lawsuit involving Hermès' luxury bags
Talking Point The lawsuit alleges the company only sells bags to people with a 'sufficient purchase history'
By Justin Klawans, The Week US Published
-
Empty-nest boomers aren't selling their big homes
Speed Read Most Americans 60 and older do not intend to move, according to a recent survey
By Peter Weber, The Week US Published
-
The wine industry is getting pressed as young people drink less
Under the Radar The once-dominating drink is not aging well
By Anya Jaremko-Greenwold, The Week US Published
-
Brazil accuses Musk of 'disinformation campaign'
Speed Read A Brazilian Supreme Court judge has opened an inquiry into Elon Musk and X
By Rafi Schwartz, The Week US Published