Understanding the Implications of Visa and Mastercard's $30 Billion Deal on Credit Card Rewards
Friday, 19 April 2024, 18:00
Expert Quotes: What Visa and Mastercard's $30 Billion Deal Means for Credit Cards
Visa and Mastercard recently announced a major legal settlement with retailers that promises to reduce credit card processing fees. This deal could lead to $30 billion of cost savings for merchants during the next five years.
Why is this $30 billion deal significant?
- $30 billion = $6 billion per year: Reductions are promised over five years, equivalent to a 6% discount from the record-high swipe fees in 2023.
- Fees are being reduced by 0.04%: The specific reduction in swipe fees is only four basis points, indicating a marginal impact on credit card rewards.
The reduction in fees is a small step that may not immediately affect credit card rewards programs as significantly as anticipated.
Unpacking the Visa and Mastercard Settlement
- Impact on Merchant Practices: Merchants can now adjust pricing based on card types, leading to potential changes in how credit card payments are accepted.
- Risks for Premium Credit Cards: Premium cards offering high rewards may face challenges if merchants impose higher fees for such cards.
Overall, while the deal signals a shift in the credit card industry, its long-term impact on credit card rewards remains uncertain pending merchants' responses.
This article was prepared using information from open sources in accordance with the principles of Ethical Policy. The editorial team is not responsible for absolute accuracy, as it relies on data from the sources referenced.