Published on 27 Mar 2024 on Zacks via Yahoo Finance
Mastercard Incorporated MA recently struck a settlement deal with U.S. merchants, according to which it has agreed to lower its U.S. credit card interchange rates and provide more discretion to merchants on imposing surcharges on credit card transactions. If the agreement materializes, which is subject to the final nod of the Eastern District Court of New York, it will solve a nearly 20-year-long dispute that originated from a chain of complaints by merchants against MA, Visa Inc. V and other financial institutions. V also agreed to the settlement terms.
The accusations, filed initially in 2005, mainly revolved around the companies’ interchange structure and point-of-sale acceptance rules, which resulted in the overcharging of merchants for accepting Mastercard and Visa-branded credit and debit cards.
Delving deeper into the settlement terms, the reduction in published and effective interchange rate applies to U.S.-issued consumer credit and commercial credit transactions across nationwide merchant locations. The lowered rates will continue for a period of five years. Additionally, the payment networks will offer greater flexibility and a wider array of options to merchants for imposing surcharges on credit card transactions.