In a bid to foster a more equitable landscape for small businesses and the wider merchant community, Mastercard (NYSE: MA) has embarked on an initiative to lower its U.S. credit card interchange rates over a five-year term, following a legal settlement with merchants.
The agreement, reached in conjunction with Visa and court-appointed class counsel, encompasses a suite of adjustments to Mastercard’s network regulations. It ensures that small businesses and merchants continue to enjoy the advantages of electronic payment acceptance, while consumers benefit from a seamless and secure payment experience.
Key highlights of the settlement include:
Interchange Rate Reduction: Payment networks, including Mastercard, will decrease the published and effective interchange rate on U.S.-issued consumer credit and commercial credit transactions at merchant locations across the United States.
Five-Year Rate Cap: The reduction in interchange rates will effectively serve as a cap for a period of five years, extending to all U.S.-issued credit programs under the Mastercard brand. This initiative offers merchants clarity and predictability in their acceptance programs, while fostering healthy competition within the industry.
Simplified Surcharge and Discounting Rules: The settlement introduces simplified rules for credit card transaction surcharging, providing merchants with increased flexibility. These rules uphold essential consumer protections and transparency, replacing standards that were last updated in 2012.
“This agreement marks a significant milestone in resolving a longstanding dispute, providing substantial certainty and value to business owners,” commented Rob Beard, Chief Legal Officer, General Counsel, and Head of Global Policy at Mastercard. “Our focus remains on delivering consumers, small businesses, and all business owners a superior payments experience, coupled with strong value and peace of mind.”
The settlement awaits final approval by the Eastern District Court of New York. Upon receiving court approval, Mastercard will have addressed the majority of pending U.S. merchant litigations aimed at reforming the company’s interchange structure and merchant acceptance rules.
It’s important to note that Mastercard does not admit to any wrongdoing with respect to the plaintiffs’ allegations. All rule changes will take effect after the settlement’s approval, expected in late 2024 or early 2025.
This agreement builds upon a previous settlement with a damages class, detailed in Mastercard’s Annual Report on Form 10-K for the year-ended December 31, 2023.
About Mastercard (NYSE: MA)
Mastercard is a leading global technology company in the payments industry, dedicated to powering an inclusive digital economy. With a mission to connect and empower individuals, financial institutions, governments, and businesses worldwide, Mastercard’s innovative solutions facilitate safe, simple, smart, and accessible transactions. Operating in over 210 countries and territories, Mastercard is committed to unlocking priceless possibilities for all.
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical facts may be forward-looking statements. Forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those expressed or implied in such statements. Factors that could cause actual results to differ materially include whether court approval of the settlement agreement will be obtained. For additional information on factors that could cause actual results to differ materially, please refer to Mastercard’s filings with the Securities and Exchange Commission.
Contacts:
Mastercard Investor Relations Devin Corr Phone: 914-249-4565 Email: investor.relations@mastercard.com
Mastercard Communications Seth Eisen Phone: 914-249-3153 Email: Seth.Eisen@mastercard.com
Source: Mastercard Investor Relations
