Visa and Mastercard Fined Almost $200M

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Visa and Mastercard were hit with an antitrust lawsuit for charging high swipe fees to merchants. They agreed to a settlement of $5.6 billion, with nearly $200 million going towards fines.

The settlement aims to benefit both merchants and consumers:

• Reduced swipe fees: Merchants will see lower swipe fees over five years, potentially saving them a total of $29.79 billion.

• Educational programs: Merchants will receive educational programs to help them understand the new fee structure.

• New rules by 2024/2025: New regulations are expected by late 2024 or early 2025 to promote fairer practices in the payments industry.

• Potential consumer savings: Consumers may see some savings reflected in lower prices, but this depends on how merchants adjust their pricing strategies.

However, concerns remain:

• Limited benefits for new merchants: Critics argue established merchants receive most of the relief, while newer businesses see limited benefits.

• Unresolved policy issues: The agreement doesn't address certain policies that could limit competition, such as forcing merchants to accept all card types.

• Further legal battles: Another legal battle is set for March 2024 to potentially address these issues and further regulate swipe fees.

Overall, this case highlights the complexities of financial regulation and corporate accountability. The hefty fines could impact the financial markets, and the changes implemented could pave the way for a more competitive payments landscape with potential savings for both merchants and consumers.

Source Links

• https://natlawreview.com/article/second-circuit-casts-doubt-named-plaintiff-service-awards-and-leaves-enforceability

• https://www.hbsslaw.com/whistleblower/cftc

• https://www.paymentsdive.com/news/visa-mastercard-landmark-credit-card-lawsuit-settlement/711356/

• https://www.npr.org/2024/03/27/1241112660/visa-mastercard-settle-long-running-antitrust-suit-over-swipe-fees-with-merchant

• https://news.bloomberglaw.com/antitrust/visa-mastercard-swipe-fee-deal-fails-to-stem-more-litigation

• https://apnews.com/article/visa-mastercard-merchants-swipe-fee-5f2a75674d472ef95af9f6fd426f1f6e

• https://www.nerdwallet.com/article/credit-cards/how-the-visa-mastercard-swipe-fee-settlement-affects-cardholders

• https://www.financemagnates.com/fintech/visa-and-mastercard-reached-197-million-settlement-for-inflated-atm-fees/

• https://www.paymentcardsettlement.com/Content/Documents/New Docs/Third Consolidated Complaint.pdf

• https://www.justice.gov/atr/case-document/decision-0