Block Sues Mastercard And Visa Alleging Inflated Merchant Fees by emilymason00
networks. Since merchants are not allowed to pick and choose which cards they accept, the issuing banks do not compete to win the favor of merchants, according to the suit. Member banks agree to default fees set by Visa and Mastercard so they are not incentivized to undercut each other on price and instead benefit from inflated fees, the suit argues.
As a result, there are no forces driving interchange fees down and merchants have few options for avoiding them. Interchange fees are set at varying levels depending on the type and size of the merchant and the consumer’s card, according to the suit. Credit card interchange fees typically range between. Visa declined to comment on pending litigation and Mastercard did not respond by the time of publication.
“As the number of interchange categories has increased dramatically, Visa and Mastercard have captured ever-greater margins through increased opacity and complexity,” the lawsuit reads.of U.S. consumers holding at least one credit card, merchants have little choice but to accept them all, especially as U.S. consumers become accustomed to paying with virtual cards stored on digital wallets in addition to the traditional plastic variety.
In order to accept card payments, merchants must agree to Visa and Mastercard network rules and fees. Both companies started out as associations of banks which worked together to govern the networks. In 2008 and 2006, respectively, they became public companies.
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