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Visa and Mastercard, as well as the banks who issue their cards, have reached a settlement to resolve a long-standing US antitrust case brought by merchants. The settlement aims to reduce swipe fees paid by merchants in the US for Visa and Mastercard transactions by $30bn over five years.
The antitrust settlement, announced on Tuesday, stands as one of the largest in US history and, pending court approval, could resolve the majority of claims in a nationwide litigation dating back to 2005.
Merchants have long accused Visa and Mastercard of imposing inflated swipe fees and preventing them from steering customers towards more economical payment methods through so-called “anti-steering” regulations.
Under the terms of the settlement, Visa and Mastercard have agreed to lower swipe rates by at least four basis points for three years and ensure that the average rate remains seven basis points below the current average for five years. Additionally, both card networks will cap rates for five years and eliminate anti-steering provisions, granting merchants greater flexibility to offer discounts or surcharges on transactions..
While some industry analysts view the settlement as a significant concession by Visa and Mastercard, others argue that it falls short of adequately addressing merchants’ concerns and may not result in meaningful long-term relief.
“It’s a bad deal for merchants,” said Doug Kantor, general counsel of the National Association of Convenience Stores. “It provides very small, very temporary relief, but afterward Mastercard and Visa will be free to raise rates, and the agreement doesn’t provide a mechanism to slow an increase.”
According to TD Cowen analyst Jaret Seiberg, there’s a possibility of opposition from small banks and credit unions, who may raise concerns over the potential for major retailers such as Walmart to strike agreements with larger banks, allowing for discounts on certain cards during checkout.
However, he said the agreement reflects “extraordinary concessions” by Visa, Mastercard and banks because merchants can impose surcharges on airline and cash-back credit cards, though few may do so because they would rather complete sales than save on fees.
The settlement requires approval from US district judge Margo Brodie, which is expected to happen in late 2024. Appeals are also a possibility.
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JPMorgan CEO Jamie Dimon had a lunch meeting with US vice-president Kamala Harris at the White House last week, as reported by the Financial Times citing sources familiar with the matter.
The meeting, which was not disclosed in Harris’ schedule, follows Dimon’s recent public approval of some aspects of former President Donald Trump’s policies and, according to the FT, may be an effort from both sides to mend relations ahead of the 2024 US election.
During his visit to Washington, Dimon also held discussions with White House chief of staff Jeff Zients, federal regulators and members of Congress. The details of these conversations remain undisclosed.
The FT notes that while private meetings with senior White House officials are not uncommon, Dimon’s discussions coincide with the banking industry’s pushback against proposed stricter bank capital rules by US regulators. Jay Powell, chair of the Federal Reserve, recently indicated forthcoming revisions to the proposal.
Dimon has been frequently named as a possible nominee for the position of US Treasury secretary. While he has previously identified himself as a Democrat, his views have shifted away from the party’s stance in recent years.
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Ratings agency S&P Global has downgraded the credit ratings of five regional US banks due to their commercial real estate exposure, rekindling fears among investors regarding the health of the sector.
First Commonwealth Bank, M&T Bank, Synovus, Trustmark and Valley Bank were all downgraded from “stable” to “negative”.
The agency cited potential stress in CRE markets that could impact the asset quality and performance of these banks, which hold some of the highest CRE loan exposures among the institutions it rates.
This downgrade follows heightened investor concern earlier this year when New York Community Bank reported an unexpected quarterly loss, attributing it to provisions on bad CRE loans.
According to S&P, nine US banks, representing 18 per cent of those it rates, have negative outlooks, which it says are due in part to “sizeable CRE exposures”.
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Copper, a cryptocurrency company chaired by former UK finance minister Philip Hammond, has stirred controversy after hosting a party where guests were served sushi off two scantily clad models, prompting renewed scrutiny of the industry’s culture.
A photo obtained by the Financial Times showed individuals in what appeared to be thin bodysuits serving sushi on their partially naked bodies in a room adorned with red-lacquered walls.
An invitation for the after-party boasted of providing a sensory experience beyond the ordinary, with a person close to Copper describing the event as “more performative art rather than anything seedy”, adding that the models wore swimming costumes. Hammond did not attend the gathering, the person added.
The incident comes amid increasing interest in the cryptocurrency sector following bitcoin’s recent surge to record highs above $70,000. However, the industry has faced ongoing challenges, including governance issues and inappropriate behaviour typified by the so-called “crypto bro” culture, which has been criticised for exacerbating governance shortcomings.
