Visa (NYSE:V) and MasterCard (MA) have reached a historic settlement, agreeing to reduce credit card interchange rates after a legal battle that lasted for two decades.
The fees are paid to credit card companies like Visa and Mastercard (NYSE:MA) in exchange for enabling transactions. When consumers use credit or debit cards for their purchases, the merchants incur fees that they ultimately pass on to the customers.
The companies said they will reduce the U.S. credit card interchange rates for at least a five-year period as part of a legal settlement with merchants. The rates are capped into 2030.
The settlement also gives merchants increased flexibility at the point of sale, allowing them to choose preferred payment methods and offering more options regarding surcharging.
"By negotiating directly with merchants, we have reached a settlement with meaningful concessions that address true pain points small businesses have identified,” said Kim Lawrence, President of Visa North America.