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Visa, Mastercard Settlement Only Temporary Fix Say Small Business Groups

Visa and Mastercard have settled a nearly 20-year dispute with merchants over credit card fees, agreeing to cap interchange rates through 2030. According to AP, the agreement allows small businesses to have similar bargaining power to large companies in regard to payment processing rates. The initial lawsuit claimed that merchants that accept Visa and Mastercard credit cards were paying “excessive fees” and “that Visa and Mastercard and their member banks acted in violation of antitrust laws,” AP reports.

The settlement could help merchants and consumers save up to $30 billion in swipe fees over the next five years, AP reports. 

As a result of the settlement, Visa and Mastercard agree to lower credit card swipe fees by at least 4 basis points for at least three years, and the average swipe fees will be at least 7 basis points lower than the current average for five years, according to USA Today.

While these changes are welcome, advocacy groups including the Merchant Payments Coalition (MPC) say they don’t go far enough and are temporary, which means the protections and potential savings will eventually end.

“This settlement is a bad deal for merchants,” MPC executive committee member and National Grocers Association senior vice president of government relations and counsel Christopher Jones says. “A few years of very small relief followed by business as usual is not a good outcome from 20 years of litigation. The settlement does nothing to actually bring competitive market forces to swipe fees or change the behavior of a cartel that centrally fixes rates and bars competition. Instead, it tries to provide token, temporary relief and then allows the card companies to raise rates yet again. Congress needs to act so that we will have real reform that will benefit merchants and their customers.”

MPC and other groups, including Small Business Rising, a coalition of independent business organizations that advocates for small business interests, continue to support passage of the Credit Card Authorization Act. The bipartisan legislation is sponsored by Sen. Dick Durbin (D-IL) and calls for increased competition in the credit card network market. 

“It is time to pass the Credit Card Competition Act to enhance competition between credit card networks and ultimately lower costs for small businesses and consumers,” Sen. Durbin says in a statement. “We need to bring real competition to the credit card industry. My bill ensures that the Visa-Mastercard duopoly ends their price gouging tactics that disproportionately hurt American families and small businesses.”

According to Sen. Durbin’s release, businesses paid an estimated more than $100 billion in swipe fees on Visa and Mastercard branded cards in 2023, and swipe fees can represent the second highest cost for small businesses, with only labor costing more. 

In June 2023, the North American Hardware and Paint Association (NHPA) joined SBR and other trade groups and signed on in support of the CCCA. 

Co-sponsors of the CCCA in the Senate and the House are: 

  • Sen. Roger Marshall (R-KS)
  • Sen. Peter Welch (D-VT)
  • Sen. J. D. Vance (R-OH)
  • Sen. Josh Hawley (R-MO)
  • Sen. Jack Reed (D-RI)
  • Rep. Zoe Lofgren (D-CA-18)
  • Rep. Thomas P. Tiffany (R-WI-7)
  • Rep. Jefferson Van Drew (R-NJ-2)
  • Rep. Max L. Miller (R-OH-7)
  • Del. Gregorio Kilili Camacho Sablan (D-MP-At Large)
  • Rep. Bob Good (R-VA-5)
  • Rep. James P. McGovern (D-MA-2)

Reach out to your legislators to express your support for the CCCA as a small business operator.

About Melanie Moul

Melanie is the communications and content manager for the North American Hardware and Paint Association. She joined the NHPA team in 2016 as an editor for Hardware Retailing and now helps lead the communications team to deliver relevant, timely content to the industry.

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