Visa and Mastercard Hit With New Antitrust Suit Over Swipe Fees
Visa, Mastercard, Major Banks Facing New Litigation over 'Anticompetitive' Fees
A fresh class action accuses Visa, Mastercard, and several major banks of imposing anticompetitive credit card transaction fees on merchants. The litigation targets the interchange and network fees that retailers say inflate the cost of accepting card payments, reviving a long-running legal battle over how the card networks set prices.
Visa, Mastercard, Major Banks Facing New Litigation Over 'Anticompetitive' Merchant Credit Card Transaction Fees
- modeless
I don't care about the fees as much as I care about the terrible experience of making payments. Why is it still such a chore to fill payment forms on the web? Why do we still print BPA thermal paper receipts for every purchase? Why am I still sometimes asked for my signature? Why do I have to unlock my phone to pay when I don't have to unlock my card, I have zero liability for fraudulent purchases in either case? Why isn't every receipt backed up and searchable in my account (with E2EE)? Why can't I pay my friend directly with my credit card? Why can't I manage and cancel any recurring subscription from my card app? Etc etc.
- jawns
One thing I've noticed with the bigger gas station chains near me is a push to have users download their mobile app, set up ACH payments, and use that as their payment method instead of credit cards in exchange for 10 cents off per gallon. From the merchant side of things, they're paying about $0.60 to process the transaction via ACH, versus $2-$2.50 for credit card transactions, per fill-up. So even if they're merely breaking even once the discounts are factored in, they're still disrupting the credit card companies' dominance.
I would not be surprised if rather than continuing to battling it out with the credit card companies to negotiate for lower fees, more and more retailers adapt to the cashless economy by leaning on ACH in lieu of credit cards, especially in market segments where repeat business is common (basically any retailer that has an existing loyalty program).
To put it another way: Sure, litigation is an option, but even if you win the concessions you want, it will leave the credit card companies entrenched. Pushing more customers to pay via non-credit-card methods has the benefit of more immediate financial impact, less reliance on the legal system, and deterioration of the power that led to the anticompetitive behavior in the first place.
- boplicity
Basic reforms that could solve this problem:
1. Merchants need to be allowed to add card processing fees on top of any transaction, and it should be possible to do this very easily. If not this, then any receipt should be required to include card processing fees.
2. Merchants should be allowed to pick and choose which cards they accept without penalty.
Those two simple changes would add competitive pressure back into the payment processing market, and quickly cause fees to lower.
- Glyptodon
I do think we're getting to the point that middlemen don't have much value add. Economics even suggests they don't add value I think. Possibly neutral markets, payments, and logistics should just be a public service.
- Anonyneko
I wish they would face litigation for banning the sale of large swaths of content (or even banning the content altogether on sites relying on donations/subscriptions to survive). Paypros have no business being censors.
- hmokiguess
I think a lot of this is starting to bubble up to the surface after PIX made headlines[1]
- havaloc
A reminder to listen to the Visa episode of Acquired Podcast if you truly wish to understand the scale of Visa and how it all works. Even at 3+ hours you'll love every minute of it.
- tiffanyh
What seems to be getting lost is that the acquirer, not the payment network, sets the Merchant Discount Rate. The acquirer is also the merchant’s direct payments provider.
Yet the acquirers seem to be always absent from these lawsuits.
- ktosobcy
EU forced MC/Visa to slash their intercharge fees to max 0.20%... that's why there is no "reward" program over here because we are not being ripped off constantly :)
- legitster
I think I would push back on the idea that credit and debit cards represent a deadweight loss to the economy. Operating a cash business has its own expenses - theft risk (employee or otherwise), handling time, and (most importantly) you are limiting your customer base to only cash. There's a lot of reasons lots of small businesses are going card only.
For good or bad, a lot of studies have confirmed that cards have overwhelmingly increased consumer spending.
I think the far stronger case is that the industry has no actual incentive to fix the underlying fraud that they are charging merchants to fight. They have done a lot of work to institutionalize the problematic infrastructure and make it almost impossible for startups or outsiders to fix.