President Joe Biden’s administration is taking aim at credit card late fees in a new effort to crack down on unfair pricing practices. A recent settlement between Visa and Mastercard and U.S. merchants could potentially lead to lower fees for processing credit card payments, which may have a ripple effect on credit card users.
The settlement, which is still subject to court approval, includes provisions for lowering interchange rates by at least 4 basis points for three years and requiring swipe rates to be at least 7 basis points below the current average for the next five years. Merchants will also have the option to impose surcharges on premium credit cards with higher swipe fees.
While some experts believe this could result in more expensive premium cards for consumers, others are skeptical that merchants will pass down any savings to customers. The National Retail Federation estimates that merchants could save billions of dollars in the years following the settlement, but it remains to be seen whether these savings will be reflected in lower prices for consumers.
Despite the potential impact on credit card users, credit card issuers like Visa and Mastercard are expected to maintain their rewards programs and access to credit. The settlement is seen as a temporary solution, with little time for significant changes to be made by the companies involved.
As the settlement moves through the approval process, consumers will have to wait and see how it ultimately affects their wallets and credit card usage.
