By SEMA Washington, D.C., Staff
A federal judge has approved a $5.7 billion settlement between Visa/MasterCard and U.S. merchants over fees charged each time a customer swipes a credit or debit card. The ruling follows years of litigation over allegations that the fees were improperly fixed. The retailers argued that they have limited power to negotiate the “swipe fee” amounts that may range from 2% to 5% of the purchase price. The financial firms counter that they are providing a service that benefits the merchants. If it is not appealed, it would represent the largest private antitrust settlement in history.
Two years ago, Congress directed the Federal Reserve to place caps on debit card swipe fees (but not credit cards). The fees are currently set at 21 cents per transaction plus 1–3 cents more to cover fraud prevention and other adjustments. A court has rejected that amount as too high but is awaiting a new recommendation from the Federal Reserve.
For more information, contact Stuart Gosswein at stuartg@sema.org.