The 13-year long running feud between Visa, Mastercard and a number of US banks reached a settlement of $6.2 billion. This has the crypto enthusiasts finding the solution in cryptos like Bitcoin.
Visa, Mastercard settles $6.2B for a long-running feud with merchants
Yesterday, Mastercard, Visa and a number of US banks agreed on a settlement of $6.2 billion in a long-running lawsuit filed by merchants over the fees paid by them when accepting card payments.
Previously, Visa and Mastercard reached a $7.25 billion in the largest all-cash US antitrust settlement with the merchants. However, that time it squeezed to $5.7 billion after about 8,000 retailers opted out including Starbucks and Lowe’s. Later, it was thrown out by a federal appeals court and then last year Supreme court refused to revive it.
The lawsuit is on behalf of around 12 million retailers that names Citigroup, Bank of America and JPMorgan Chase among others as the card issuers.
The dispute that began in 2005, accuses the credit card companies of violating the federal antitrust laws by illegally inflating the swipe fees or interchange. At that time both Visa and Mastercard have been owned by banks which later on went public that soared their shares value.
Every year, about $90 billion goes in process cost (every time buy button on the website or a credit or debit card is swiped) by retailers for which payments networks like Visa and Mastercard, banks and payment processors fight to get a share of.
The payments industry is basically divided into consumer, consumer’s bank, merchant and merchants bank. As for the cost, it is usually 2 percent of a purchase price for a credit card transaction while 24 cents for a transaction with a debit card.
Need to eliminate “anti-competitive fees” practice, go crypto then?
Though the settlement has been reached it still needs to be approved by the court. On one side, as shared by the General Counsel for Visa, Kelly Mahon Tullier
“After years of thoughtful negotiation, we are pleased to be able to reach this agreement and move forward in our partnership with merchants to provide consumers convenient, reliable, secure ways to pay.”
On the other side, the general counsel for the National Retail Federation trade group, Stephanie Martz the root of the problem needs to be fixed as she says:
“The monetary settlement doesn’t solve the problem. Ending the practices that lead to these anti-competitive fees is the only way to give merchants and consumers full relief once and for all.”
Well, though the crypto market is still nascent, cryptocurrencies like Bitcoin have been created with the purpose of eliminating the third parties only. Crypto enthusiast like Kevin Rooke, believes so as he shares:
Visa, Mastercard, and a few U.S. banks just agreed to pay $6.2 billion to merchants over the fees they must pay when accepting credit card payments.
Merchants desperately want a less expensive way to accept payments.
That’s what crypto is for. pic.twitter.com/WFcKQmMxZX
— Kevin Rooke (@kerooke) September 18, 2018
This certainly has the crypto community going as for the starters as commented by one Redditor, “We all know that $6.2B won’t be paid by anyone other than there users via increased costs elsewhere.”
Another Redditor, Robbins_Financial shares:
“This is a classic example of why we need to do away with third parties. The transparency is just really minimal. And even if there was transparency, the transaction fees are still always unnecessary. Issues Bitcoin can solve.”
But not everyone is in favor as Redditor south_garden comments,
“So far I am still paying the same price if not more for watercooling parts on performance PC and ek using bitcoin. As a churner, i am fine with taking advantage of receiving premium rewards from credit cards.”