America’s two major payment card services companies have proposed a deal that could put an end to decades of legal wrangling.
Both Visa and Mastercard have said they will reduce fees for retailers who accept their credit cards as payment methods, after a drawn-out series of proposals and protests from stores and businesses.
One of the changes would see an alteration to the “honor all cards” rule. Previously, this meant that if a store accepted one form of Visa or Mastercard, it would have to accept every single card linked to the company, regardless of whether or not
It is still not yet entirely obvious whether the proposals will be accepted by the retail industry, nor what the long-term impact of the move, if it goes ahead, will be.
Some industries might benefit more than others. For example, operators of online gambling sites that accept Mastercard might find themselves passing their savings on to customers in the form of increased bonuses. Also, with regards to the online casino sector,
there may be more of these Mastercard-powered options joining
Cardplayer’s list and providing users with easy payments. This is of immense benefit to players who are already familiar with and use Mastercard.
In general, the move should see businesses having to pay less to accept credit cards, which could, customer advocates hope, see further savings passed down to customers. On the other hand, there might be fewer immediate price changes, as the proposal by
Mastercard and Visa has not yet been accepted by retailers. The case, which has been running in one form or another since the mid-2000s, has previously stalled at the offer stage twice as retailers rejected offers from card companies.
At present, American card fees stand at an average of around 2.35 per cent. In contrast,
card fees in the European Union are capped at 0.2 per cent of transactions for debit cards and 0.3 per cent of transactions for credit cards.
Not everyone is pleased with the proposals. The
National Retail Federation (NRF) said that there were some serious concerns with the plan which, NRF chief administrative officer Stephanie Martz said, was more about “window-dressing” than offering anything with any real substance.
Martz claimed that the deal did not go far enough, and the proposed changes that would allow retailers to reject some cards would not make any difference. She suggested that the matter should not go before the courts but should, instead, be part of a federal
legislative bill.
She added: “This is the third attempt to settle this case, and the card industry either just doesn’t get it or just doesn’t care.”
There have also been concerns about the future of certain reward scheme programs if the deal is accepted.
A lot of credit card reward programs are linked to a premium version of a Visa or Mastercard, which, in turn, costs more for merchants to process. If the “honor all cards” agreement ends up being revoked, businesses could choose to decline those particular
payment cards while accepting cheaper, non-premium ones. As a result, this could mean that premium cards could incur a surcharge on a bill if they are accepted.
The Visa and Mastercard scheme would see the average credit card charge stand at around 1.25 per cent after eight years. The case does not involve American Express cards nor does it concern debit cards.
