CHARLOTTE--A new $7 billion settlement with Visa and Mastercard could change the way you're charged when you use your credit card. The suit was filed in 2005, by millions of merchants, suing for damages because of credit card swipe fees. Many businesses say the fees for every credit card swipe are too steep, and impact their profit margin.
With every credit card swipe, the business has to pay a fee. Credit card companies say the charge covers the processing fee of a debit or credit card.
"If you come in and pay $2 for a greeting card, I could pay as much as 50 cents to the Visa, Mastercard companies to process that sale,” said Paper Skyscraper owner Ron Wooten.
Wooten owns a small business in Charlotte and knows all about the transaction fees, he's been paying them since his store began doing business.
Wooten is paying attention to a settlement among seven million merchants, and credit card companies Visa, Mastercard, and many of the big banks that back them. Friday, the card companies agreed to pay more than $6 billion for alleged past damages and another billion for a temporary reduction in future fees.
"Hopefully what it will do is help the Visa and Mastercard people understand they don't have cart blanche to do anything they want,” said Wooten. “They have raised their rates almost every year for the past 20 years since we've been in business."
Mastercard released a written statement about the agreement, saying "Although we have strong defenses to all claims, a settlement avoids years of litigation and uncertainties that are inherent in such cases. We believe that today's (Friday's) settlement should resolve all issues with the merchant community."
The settlement will also allow merchants to negotiate transaction fees with the card companies in the future. A judge must approve the settlement.