Visa and Mastercard are nearing a settlement with merchants that would lower interchange fees and give businesses more flexibility in accepting payments, according to a recent report by the Washington Reporter. The agreement, which still requires court approval, comes after long-running litigation over credit-card processing costs.
The Wall Street Journal reported that the settlement includes a reduction in interchange rates and new options for merchants to differentiate among types of cards. The dispute has centered on whether card networks and issuing banks imposed rules that limited merchants’ ability to manage rising costs associated with payment processing.
Senator Thom Tillis (R–N.C.) commented on the development: “I appreciate Visa and Mastercard’s continued efforts to reach a settlement on interchange fees. Today’s announcement would provide small businesses with more flexibility to negotiate which cards they accept, while also enacting limits on interchange rates for the next several years. As the structure of the deal is reviewed, Congress should recognize that business-to-business solutions are always preferable to heavy-handed government mandates.”
A Senate source told the Washington Reporter: “This shows the private sector can work, and hopefully the big retail lobbyists can end their quixotic campaign to have a federal takeover of the credit card industry.”
The timing of this potential agreement coincides with ongoing Congressional debates over proposals such as the Credit Card Competition Act (CCCA), led by Senator Dick Durbin (D., Ill.). Supporters of this legislation argue for increased government involvement in determining payment processing networks, while opponents maintain that consumers should choose their credit cards and favor private negotiations between companies.
Congressional aides expect that news of this settlement may influence discussions about whether further legislative action is needed or if industry-led solutions are sufficient. Some believe investing in new technologies and establishing national data security standards could help strengthen payment systems.