Visa and Mastercard Settle Merchant Fee Dispute: Impact on Small Businesses and Consumers
Visa and Mastercard recently ended their dispute over merchant credit-card fees through a settlement that suggests lower future fees for some cardholders, especially those with fewer rewards. However, the settlement may prompt merchants to implement multi-tiered fees by card type and in some cases reject certain cards if the fees are too high.
This could increase checkout friction as merchants might need to publish acceptable card lists, potentially leading to lost sales. Additional costs could arise from adjustments to point-of-sale systems and pricing to accommodate card-type-specific fees. Rewards programs that are currently funded by merchant fees might be rolled back or become more expensive, which would reduce benefits for small businesses. Partnerships offering small-business rewards with brands like Google Workspace, ZipRecruiter, and Lyft may become less favorable if merchant costs rise.
Data cited highlights that small-business credit-card payments rose from approximately $10,000 per month in 2020 to $24,000 per month by April 2022, with about 55% of small businesses using a corporate card in the past year. Consumers typically carry around four cards; increases in card fees and acceptance restrictions could deter purchases or provoke customer pushback at checkout.
Overall, the article argues that the settlement is not a true victory for small businesses and may simply shift costs upward.
