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Yesterday, Visa, Mastercard, and several major credit card issuers agreed to a settlement with U.S. merchants in the 2005 case, In re Payment Card Interchange Fee and Merchant Discount Antitrust Litigation. The case alleged that Visa, Mastercard, and several member banks violated antitrust laws by charging excessive fees for merchants to accept their credit cards.

As part of the settlement, the payment processors agreed to lower interchange fees by at least four basis points for at least three years and cap rates at no more than existing rates as of calendar year-end 2023 for five years—until 2030.

The agreement will also give merchants more flexibility in accepting digital payments at point-of-sale, removing anti-steering restrictions to enable more competitive pricing. Specifically, merchants will be allowed to charge for using Visa or Mastercard credit cards, which could pressure interchange fees that fund the most generous reward programs.

Hilliard Shadowen LLP, the law firm representing U.S. merchants, estimates that the settlement will save merchants roughly $30 billion in the five years during which the agreement lowers and caps fees.

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