NEW YORK (AP) -- Visa and Mastercard announced a major settlement with U.S. merchants on Tuesday, potentially ending nearly two decades of litigation over the fees charged every time a credit or debit card is used in a store or restaurant.
The deal would lower and cap the fees charged by Visa and Mastercard and allow small businesses to collectively bargain for rates with the payment processors in a similar way that the large merchants do now on their own.
Industry groups for retailers both small and large said the settlement is a positive development, but far more needs to be done to remedy the current swipe-fee situation. They noted the lowered fees would be only for a limited period of time -- three to five years -- after which the fees would return to their current levels.
"While this settlement is a step in the right direction and will provide a limited amount of short-term relief to small businesses, it does not solve the long-term anti-competitive rate-setting practices that are the root of this problem," said Jeff Brabant, vice president of federal government relations at the National Federation of Independent Business, a small-business advocacy group. "As long as the credit card networks, Visa and Mastercard, get to set the interchange rates for every bank that issues a credit card, anti-competitive pricing will remain, and small businesses will continue to pay artificially high rates."
Swipe fees are paid to Visa, Mastercard and other credit card companies in exchange for enabling transactions. Merchants ultimately pass on those fees to consumers who use credit or debit cards.
According to the settlement announced Tuesday, Visa and Mastercard will cap the credit interchange fees until 2030, and the companies must negotiate the fees with merchant-buying groups.