It was day one of my first solo trip, and I already had my legs elevated against the wall above me in Stockholm’s Story Hotel. My feet were in such excruciating pain, I couldn’t bear the thought of standing.
27.03.2024 - 16:03 / thepointsguy.com
After almost 20 years in court, the two largest credit card issuers have reached an agreement with retailers and merchants to lower interchange fees.
Interchange — or "swipe" — fees are the charges that the retailer pays when you, as a consumer, use your credit card to make a purchase. They average 2% of the cost of a transaction but can reach 4% for premium credit cards.
That revenue gets passed along to the bank, which puts it toward rewards it offers cardholders — including cash back, points and miles — as well as to underwrite shopping perks like purchase protection and return protection.
The fee is built into the cost of most goods and services and helps to cover credit card benefits and even the points that we value so much here at The Points Guy.
With this new agreement, retailers are expected to save billions of dollars in interchange fees over the next five years. Visa and Mastercard will lower their rates by 0.04 percentage points for three years and an average of 0.07% over the next five years. However, this agreement is subject to approval by the U.S. District Court for the Eastern District of New York.
The settlement occurred amid pressure from some senators to introduce industry-wide legislation in the form of the Credit Card Competition Act, which may no longer be needed if this agreement holds. The proposed legislation could have far-reaching, potentially negative consequences for consumers and travelers, especially those who like to earn rewards with their credit card spending.
The Electronic Payments Coalition (EPC), which is a group representing credit unions, community banks, payment card networks and other banking institutions involved in the electronic payment process, issued a statement applauding the settlement, suggesting it further erodes the case for new legislation.
"The agreement between merchants, Visa, Mastercard and financial institutions has been decades in the making and treats businesses of all sizes equally without government mandates or jeopardizing consumers' data security and rewards programs," said EPC Executive Chairman Richard Hunt.
"The Durbin-Marshall bill has had no debate, no legitimate hearing and continues to be unnecessary," he continued.
That said, Senator Dick Durbin's office released a statement after news of the settlement came to light, vowing to press on in pursuit of passing the Credit Card Competition Act. "Today's news solidifies that it is time to pass my bipartisan, bicameral legislation—the Credit Card Competition Act—to enhance competition between credit card networks and ultimately lower costs for small businesses and consumers," the senator's statement read. "We need to bring real competition to the credit card industry. My bill ensures
It was day one of my first solo trip, and I already had my legs elevated against the wall above me in Stockholm’s Story Hotel. My feet were in such excruciating pain, I couldn’t bear the thought of standing.
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