The Courts Once Again Push Back On Credit Card Abuses
June 17, 2024
Visa and Mastercard got a rare dose of bad news last week when a federal judge in New York indicated that she would likely reject the proposed $30 billion antitrust “settlement” to limit credit and debit card fees. That’s good news for retailers, restaurateurs, and other small business owners suffocating under the authoritarian boot of Visa and Mastercard’s competition-killing duopoly.
The settlement of the almost 20-year old suit, brought by some ambitious trial lawyers who deftly coopted a handful of retailers to do their bidding, shouldn’t be surprising. We saw this movie before in 2012, when another judge rejected a similar sweetheart deal for the credit card companies, wisely seeing it for what it was. In the 2024 version, the average swipe fee – which can run from 1.5% to 3.5% - would fall by at least 0.04 percentage points for three years. Visa and Mastercard also agreed to “cap rates” for five years. But, of course, at the end of that timeframe, they were free to go back to their regular business of controlling the marketplace.
To say that this deal was much to do about nothing is a gross understatement. In fact, this grand “settlement” was such a nothing burger that upon its announcement, the stock prices of both companies barely moved. And last week, when it went public that it was likely to be tossed out, their stock prices, again, barely moved. Wall Street knows a good ruse when they see it. Their collective yawn at this settlement should tell everyone all they need to know. Nothing in the agreement was ever going to inhibit the credit card companies from continuing to fleece retailers and posting record profits along the way.
The judicial branch of government has now spoken twice - in 2012 and again in 2024 - that what’s happening in the marketplace is anti-competitive. And, the executive branch has been aggressively taking action in the past year as well to reign in Visa and Mastercard’s business practices. It’s long past time for the legislative branch to follow suit.
Americans for a Modern Economy is committed to ensuring that local, state and federal policies reflect changing technologies that are reshaping the way consumers, businesses and communities operate in the 21st century economy. We work with consumer advocates, businesses, think tanks, economic experts and others to raise awareness and inform discussions about the current and future policy challenges of new technology. We serve as a resource for lawmakers to help them develop modern policy solutions that benefit all Americans by expanding consumer freedom, allowing businesses to best serve their customers and preserving free market competition.