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Understanding the Visa and Mastercard $30 Billion Settlement

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Nic Beique | March 27, 2024

“Discover how the recent Visa and Mastercard settlement impacts your business and what it means for payment processing costs.”
2 min read
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    "The Visa and Mastercard settlement marks a significant step towards transparency and cost-efficiency for merchants."

    ~ Nic, CEO of Helcim

    What’s the buzz about the Visa and Mastercard settlement?

    Visa and Mastercard reached a ground-breaking settlement for $30 billion over a class action alleging they improperly set credit and debit card fees. The settlement revealed on Tuesday ranks among the largest antitrust agreements in U.S. history.

    Under the deal, Visa and Mastercard have committed to a rollback of interchange fees, ensuring these costs are lower than the rates as of December 31, 2023. They will lower swipe fees by at least 0.04% (4 bps) for three years and ensure the average rate is 0.07% (7 bps) lower than current rates for five years.

    Is this settlement good news for my business?

    Absolutely! The settlement prevents Visa and Mastercard from increasing interchange fees above the rates set as of December 31, 2023. Additionally, they are required to reduce these fees over the next three years, which means lower transaction costs for you!

    What changes can I expect regarding surcharging and convenience fees?

    Visa and Mastercard are set to simplify the rules around surcharging and online convenience fees. This means fewer restrictions for you when deciding to pass credit card processing fees onto your customers, giving you more flexibility in managing your costs.

    What should I do if I'm on an interchange plus pricing model like Helcim’s?

    If your payment processor uses interchange plus pricing, you're set to automatically gain from reduced interchange rates. This model transparently passes on interchange fees to you, adding a fixed markup, which is why costs vary with different interchange fees applied. Such transparency can lead to significant savings, enabling more competitive pricing strategies for your business.

    I'm on a flat fee pricing model. Is there anything I can do?

    It may be beneficial to review your contract and discuss with your payment processor whether any adjustments will be made in light of the settlement. It’s also an opportunity to evaluate the benefits of interchange plus pricing models.

    What long-term effects might this settlement have on the retail industry?

    This settlement could lead to more transparency in credit card processing fees and foster competition, potentially leading to lower costs for merchants over time. It represents a significant shift in the financial dynamics between merchants, payment processors, and card networks.

    What should I do next?

    Review your payment processing agreement, stay informed about changes resulting from the settlement, and consider how you can use any potential savings to benefit your business and customers. Additionally, think about how this could impact your pricing strategy and whether passing on costs or savings to your customers aligns with your business strategy.

    Key Takeaway

    Merchants with interchange plus pricing, such as the rates offered by Helcim, are better positioned to see an immediate impact from this settlement, without having to do any negotiation or make changes to their account. Understanding your pricing model and staying proactive with your payment processor can help you navigate the changes effectively.

    At Helcim, we're committed to passing these advantages directly to you.

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