Credit card companies near deal over charging stores

Visa And MasterCard is negotiating a deal with merchants that would lower fees, but merchants may also be seen rejecting certain credit cards, according to a new report.

The terms of the agreement will reduce the fees stores must pay on credit card transactions, while also giving them the authority to decline certain credit card transactions. thoseaccording to a Wall Street Magazine report.

According to the proposed solution, Visa and Mastercard will drop it credit card Interchange fees paid by merchants, which typically range between 2 and 2.5 percent, average around 0.1 percent over several years. Daily reported.

The most notable change for consumers will be merchants’ ability to decline certain credit cards. The current agreement between merchants and credit card companies is that if they accept Visa or Mastercard, they must accept them all.

Under the new agreement, credit cards will be divided into several categories, including rewards cards, non-reward cards and commercial cards. Some merchants may choose not to accept rewards cards that charge them higher transaction fees. Independent It sought comment from Visa and Mastercard.

This change could be particularly disruptive for consumers, as rewards cards have become hugely popular over the past few years.

According to a Ipsos survey As of March 2024, 71 percent of Americans have at least one rewards credit card, and two in three people with such a card say they choose to use them for purchases because of the points they earn for things like travel, gas or retail discounts.

Nearly half of survey respondents and 70 percent of younger respondents said they use their cards to build credit, while another 13 percent said they “shop around” to find the best rewards cards they can get.

While stores that reject rewards cards may save on fees, they will also turn away sales and potentially suffer reputational damage from disappointed customers.

The conflict between credit card companies and merchants dates back to 2005, when merchants sued Visa, Mastercard and several major banks. The lawsuit accused credit card companies and banks of engaging in anticompetitive behavior by using interchange fees and forcing merchants into an all-or-nothing credit card acceptance policy.

Last March, both sides reached a deal that reduced interchange fees by an average of about 0.07 percent over five years, but a judge rejected the deal.

Assuming that the parties agree on favorable terms, the current agreement will also require court approval.