Visa, Mastercard lower swipe fees in settlement with merchants

March 26 (UPI) -- Visa, Mastercard and their card-issuing banks settled a decades-old federal lawsuit in New York brought by merchants over high swipe fees.

The settlement, which only applies to merchants in the United States will lower swipe fees merchants pay Visa and Mastercard by $30 billion over the next five years. The deal has been in the work since merchants first filed the lawsuit in 2005.

"This agreement brings closure to a long-standing dispute by delivering substantial certainty and value to business owners, including flexibility in how they manage the acceptance of card programs," Rob Beard, chief legal officer and general counsel for Mastercard, said in a statement.

"As the court reviews the settlement, we will focus our energy on continuing to provide customers, small businesses and all business owners what they expect from Mastercard -- a better payment experience, strong value, and peace of mind.

Kim Lawrence, president of Visa North American said that customers will ultimately benefit from the lowering of swipe fees since that cost was often passed on to them.

"We are making these concessions while also maintaining the safety, security, innovation, protection, rewards and access to credit that are so important to millions of Americans and to our economy," Lawrence said in a statement.

Swipe fees often cost merchants about 2% of the total transaction the customer makes on their purchase total, but for some higher-end cards, the swipe fee could be as high as 4%, per the National Retail Federation.

The settlement could lower those fees for merchants by least 0.04 percentage points for at least three years and the current rate for up to five years.