| | | Knew it was coming, was one of the main reasons I sold both last year. Neither had beaten VOO for the last 5 years either.
Visa ( V) and Mastercard ( MA) are close to a settlement that could resolve a two-decade legal battle with U.S. merchants by reducing credit-card fees and loosening restrictions on which cards stores must accept, The Wall Street Journal reported Saturday, citing people familiar with the negotiations.
The agreement under discussion would trim interchange fees -- typically between 2% and 2.5% -- by about 0.1 percentage point over several years. It would also give retailers more freedom to refuse certain cards within a network, such as high-fee rewards cards. The deal would still need court approval.
If finalized, stores could choose whether to accept specific categories of cards, such as rewards, non-rewards or commercial cards, instead of being required to take all cards from a single network. That change might prompt some merchants to turn away costly rewards cards, though doing so could risk alienating customers who rely on them.
The case, filed in 2005, accused Visa ( V), Mastercard ( MA) and major banks of anticompetitive practices tied to interchange fees and card acceptance terms. A prior 2024 proposal to reduce fees slightly and allow limited surcharging was rejected by a judge. The new deal reportedly includes similar provisions related to surcharges.
Disputes among lawyers representing various merchant groups have complicated the case, while tensions between retailers and the card networks have intensified as fees have climbed, reaching $72 billion in 2023, according to the Nilson Report data cited by the Journal.
Premium rewards cards, which have surged in popularity, remain a flashpoint because their perks are funded by the very fees merchants pay. As a result, many small businesses have begun passing those costs to customers through credit-card surcharges.
The potential settlement wouldn’t affect separate lawsuits by large retailers seeking damages over credit-card fees and acceptance rules, some of which are expected to go to trial next year. |
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