Visa & Mastercard Eye Deal to Reduce Merchant Fees

According to a Wall Street Journal report, on Saturday, US payment companies Visa and Mastercard are settling with merchants by reducing the fees that stores pay and increasing their dominance to refuse certain credit cards.

Visa and Mastercard are expected to reduce interchange fees, typically ranging from 2% to 2.5% per transaction, by approximately 0.1 percentage points over several years, according to sources cited by the Journal. Additionally, the companies intend to ease existing rules that mandate merchants accepting one network credit card to accept all types.

Mastercard and Visa declined to comment to Reuters, and the report could not be verified immediately.

The expected deal, soon to be finalised, would categorise credit-card acceptance into sections such as rewards cards, no-rewards cards, and commercial cards, as reported by the Journal.

This settlement aims to resolve a legal dispute that began in 2005.

Last year, global payment technology firms agreed to a settlement estimated at $30 billion to cap merchant fees on credit cards. This settlement included a commitment to reduce swipe rates by at least 0.04 percentage points for three years and maintain an average rate seven basis points below the current level for five years.

Visa and Mastercard denied any wrongdoing during the settlement.

Merchants have long accused these companies of charging high swipe or interchange fees and of preventing them from directing customers to more affordable payment options.

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The new settlement under discussion would also involve surcharging, according to sources familiar with the matter, as reported by the Journal.