The use of credit cards has increased a lot today. Credit cards are used extensively in almost all the world’s countries, including India. Credit cards provide many benefits to users, but to use them, one has to pay various charges. Now, users can get some relief from this.
$30 Billion Settlement
An agreement has been reached between the world’s two largest card networks, Visa and MasterCard, which is expected to reduce the expenses of credit card users. According to a Reuters report, Visa and MasterCard have agreed to a settlement of $30 billion. This Settlement is regarding merchants’ credit card fees. Settlement is also applicable to debit card fees.
Both Agreed On These Conditions
Both card network companies announced the Settlement this week. Under the Settlement, both network providers have agreed to reduce the swipe rate by 0.04 per cent. This deduction will be for three years. Apart from this, it has also been agreed between both networks that the average rate should be kept 0.07 per cent lower than the current rate for the next five years.
What Is Swipe Rate?
Both the networks have agreed to keep the rates fixed within the maximum limit for the next five years, and there has also been talk of removing the anti-steering provision. Swipe rate is the fee card networks like Visa and MasterCard charge for card transactions. Generally, its rate is 1.5 per cent to 3.5 per cent. Card networks collect this fee from the merchant; in almost all cases, the merchant passes this fee on to the customer. In many places, merchants warn the customer before making the card payment that he may have to pay this much extra.
In This Way, Customers Can Benefit
The agreement between the two networks has increased the hope that it will benefit card payment customers. The Settlement has left it to the merchant to decide whether to pass the rate reduction benefit to the customers. If merchants pass on this benefit, customers must pay less extra. This Settlement still needs the green signal from authorities in the US.
