Visa and Mastercard, two of the world’s largest credit card networks, and banks that issue cards with these companies, have agreed to settle an antitrust case lasting almost 20 years initiated by merchants.

In a press release on the settlement, released on Tuesday, March 26, it is noted that the agreement is aimed at reducing the fees paid by sellers. In this case, we mean those financial obligations of merchants that are provided for when customers make purchases using Visa or Mastercard cards. The agreement aims to reduce fees by $30 billion over five years. It is known that in this case, the settlement applies only to American merchants.

It is worth noting that the settlement of the lawsuit filed in 2005 has not yet been finalized. In this case, the most important step is to receive approval from the US District Court for the Eastern District of New York. Moreover, the possibility of appealing a court decision is provided, which may cause a lengthy trial.

Typically swipe fees cost merchants 2% of the total transaction amount made by the customer. According to the National Retail Federation, for some of the premium reward cards, the mentioned figure can be as much as 4%. The settlement, which has already been agreed, upon but has not yet been finalized, can reduce the mentioned fees by at least 0.04% for a minimum of three years.

As part of the settlement, Visa and Mastercard must maintain the swipe fee rates, which were fixed as of December 31 last year, for five years.

It is worth noting that merchants have long stated that swipe fees force them to raise prices. An agreement that can lower the mentioned fee will not necessarily mean cost savings for consumers. The draft settlement provides that merchants can impose surcharges on customers who hold Mastercard or Visa cards, allowing them to rack up rewards such as cashback and airline miles.

At the same time, some cardholders could get discounts on goods and services. This feature is provided because merchants can make deals with banks to get them to use the card they classify as preferred.

Currently, merchants accepting Visa or Mastercard must accept all forms of these companies’ cards.

Kim Lawrence, president of Visa in North America, said on Tuesday that the rewards that cardholders receive from this firm will not be affected as a result of the settlement. She noted that Americans’ access to loans will no longer be restricted.

Seth Eisen, a spokesman for Mastercard, also said that the settlement will not have an impact on rewards and access to credit facilities.

Jaret Seiberg, an analyst at TD Cowen, assumes that the mentioned statements do not reflect real prospects. According to the expert, the settlement will be a threat to credit card rewards and small banks. The analyst presumes that merchants will steer customers to preferred cards. It is worth noting that this is an assumption, not a guaranteed prospect.

The cost of Visa and Mastercard shares showed moderate growth after information about the settlement agreement was made public.

As we have reported earlier, Mastercard Reveals Fresh Remittance Insights.