Business 21 September 2018Dan Taylor
Credit card giants hit with $6.2B price fixing suit
Credit card giants Visa and Mastercard have often been accused of price fixing by disgruntled merchants. Now, the firms are prepared to settle on a class action lawsuit, which looks set to cost them over $6.2 billion, Bloomberg reported.
Visa and Mastercard have agreed to come up with around $4.2 billion in cash, with $4.1 billion of that burden falling on Visa. Equity in Bank of America, Citigroup and JP Morgan Chase will also be offered in part payment of the settlement.
The total settlement is hugely significant, almost equivalent to the entire market cap of Bitcoin BCH. It concerns a case around card processing fees brought by merchants unhappy with the service they were receiving—including hidden, excessive fees merchants allege they were left with no option but to pay.
Merchants in the United States alone currently generate as much as $90 billion in transaction fees for Mastercard and Visa every year. The lawsuit, brought under antitrust laws, dates back to 2005, when allegations of price fixing first began to surface.
Now, with the credit card companies’ willingness to settle, it looks as though merchants could be set to recoup some of those fees they allege were unfairly drawn.
The case shows the difficulties merchants face in dealing with centralised payment systems. In the case of Mastercard and Visa, both firms turnover in excess of $12 billion per annum and have a virtual stranglehold on merchant payments by credit and debit card.
However, with cryptocurrencies like Bitcoin BCH increasingly being adopted by merchants and consumers, it looks like another way is possible. Transaction fees are lower for merchants that accepting payments through credit and debit cards, while transaction processing speeds and reliability are also favourable for commercial use.
At the same time, Bitcoin is convenient and flexible for customers, increasingly being seen as the cryptocurrency of choice for online payments.
Without the centralisation of Visa and Mastercard, there is no monopoly on transactions around Bitcoin BCH. This is proving attractive to merchants looking to break their reliance on the large corporate payment institutions while providing customers with a more functional way to pay.
While the multi-billion dollar settlement will be seen as a positive sign for the merchants affected, cryptocurrency—Bitcoin BCH in particular—remains the best option for those looking for trusted, decentralised merchant payments.
Note: Tokens on the Bitcoin Core (SegWit) chain are referenced as BTC coins; tokens on the Bitcoin Cash ABC chain are referenced as BCH, BCH-ABC or BAB coins.
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