The DOJ's antitrust division reached a settlement with Visa Monday in a suit that stated that MasterCard and Visa had adopted rules that acted to restrain merchants from encouraging customers to use cards with lower fees.
The lawyers in the Boston case (including K. Craig Wildfang, who I criticized earlier this year for the Visa settlement), have convinced Judge Edward F.
Retailers reached an antitrust settlement on interchange fees with Visa, MasterCard and several large banks that will be good for merchants but might penalize cardholders with higher prices or decreased credit card rewards.
Visa earns data processing revenues from the authorization, clearing, settlement, transaction processing services and other maintenance and support services that facilitate transaction and information processing among customers globally and Visa Europe.
The authorization and settlement fees are most prone to competition, and we expect these fees to decline in the near future since Visa, the nearest competitor to MasterCard, has been reducing its authorization and settlement fees.
Visa and MasterCard entered a sharing agreement last year that makes Visa responsible for about 67% of any settlement and MasterCard for 33%.
WSJ: Visa, Mastercard Agree to $6 Billion Settlement Over Surcharges
The National Retail Federation points out that under terms of the settlement, a merchant who adds a surcharge to purchases on a Visa or MasterCard would have to do the same with American Express cards.
Authorization and Settlement Fee per Transaction: Authorization and settlement fees are charged to issuers and acquirers for the authorization process that Visa performs for each transactions.
FORBES: Transaction Volumes And Fees Are Fulcrums For Visa Stock
However, after the cap on swipe fees, Visa will try to maintain the current level of authorization and settlement fee make up for the lost revenues on debit card fees.
FORBES: Visa May Go Limp After Big Jump On Fed Fee Cap Ruling
Visa and MasterCard have already set aside most of the funds to pay for the cost of a settlement.
WSJ: Visa, Mastercard Agree to $6 Billion Settlement Over Surcharges
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