Visa, Mastercard's $30B Settlement: Analyst Sees 'More Record Credit Card APRs In The Short Term'

Benzinga - by Surbhi Jain, .

Visa Inc (NYSE:V) and Mastercard Inc (NYSE:MA) have made headlines with their groundbreaking $30 billion settlement with U.S. merchants.

The settlement effectively ends two decades of antitrust litigation surrounding swipe fees and merchant restrictions.

Redditor WoodKite echoed the news on r/stocks.

Visa, Mastercard reach $30 billion settlement with US merchants with fees capped for 5 years

byu/WoodKite instocks

Related News: Visa and Mastercard Reach Deal to Lower Swipe Fees, A Win for Merchants and Potential Boost for Consumer Choices: Analyst

The agreement aims to cap credit interchange rates for the next five years; alleviate financial burdens on merchants; and broaden consumer payment options.

Mastercard, Visa, and plaintiffs' lawyers released statements revealing that the settlement will introduce reduced credit interchange rates and provide merchants with greater flexibility in accepting digital payments.

“By engaging directly with merchants, we’ve reached a settlement that offers significant concessions addressing the genuine concerns raised by small businesses,” Visa North America President Kim Lawrence said.

Rob Beard, Chief Legal Officer at Mastercard, echoed this sentiment, stating, “As the court reviews the settlement, our focus remains on delivering consumers, small businesses, and all business owners a superior payment experience, exceptional value, and peace of mind.”

Pending court approval, analysts project that the outlined policy adjustments in the settlement will yield savings exceeding $29.79 billion over the initial five-year period.

Furthermore, merchants are anticipated to gain increased bargaining power, resulting in even greater savings in negotiations with Visa and Mastercard.

APR At 24.66% Is Back On The Climb

Schulz cautioned that despite the Federal Reserve’s reluctance to lower rates, credit card APRs continue to climb. March marks the 24th month out of 25 where APRs have risen. “We'll likely see more record credit card APRs in the short term, with rates for those who don't have perfect credit perhaps climbing the most, says Schulz.

“The average APR on a new credit card offer right now is 24.66% and is back on the climb, despite the Fed taking its foot off the gas,” Schulz added. He emphasized the importance of consumer advocacy and negotiation in navigating the challenging credit environment. “With delinquencies and debt totals rising, some banks are becoming more reluctant to take on transferred balances.” “The fees with 0% balance transfer credit cards rose for the second straight year,” he added.

“Three out of every four cardholders who asked for a lower interest rate on a credit card in the past year got one, according to a 2023 LendingTree report,” Schulz remarked.

Read Next: Visa And Mastercard Settle Historic Antitrust Suit With US Merchants – What’s On The Cards?

Image: Shutterstock

Latest Ratings for MA

View the Latest Analyst Ratings

© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.

Read the original article on Benzinga