Businesses Can Wean Consumers Off High-Fee Credit Cards
A proposed deal with Visa and Mastercard would let merchants steer customers away from the priciest payment methods, reducing costs while retailers wait for digital alternatives to take off.
Change is coming.
Photographer: Angus Mordant/Bloomberg
Visa Inc. and Mastercard Inc. are two of the great American success stories. Over more than five decades, they’ve built sophisticated payment networks that are now used for most card transactions around the world. This has proved quite lucrative, both for them and for the banks that issue credit and debit cards.
Yet for merchants, this arrangement has been a constant irritant. Facing limited competition, Visa and Mastercard can charge them hefty fees: more than $100 billion last year alone. Now, after years of litigation, there may be a deal that allows businesses to fight back. If the courts approve, it should invigorate the industry, encourage innovation, and speed the transition to a new generation of faster and cheaper payment methods.