Credit card late fees could potentially be lowered by a new initiative spearheaded by a “strike force” led by President Biden. While Visa and Mastercard recently reached a settlement with U.S. merchants to reduce fees, this new strike force aims to crack down on illegal and unfair pricing across various sectors, including groceries, prescription drugs, health care, housing, and financial services.
The settlement with Visa and Mastercard paves the way for retailers to implement surcharges on cards with higher swipe fees, potentially making the use of premium cards with lucrative rewards programs more expensive. However, experts have expressed skepticism about the impact these changes will have on credit card users.
According to Michael Kinsman, an emeritus professor of finance and accounting, the settlement does not seem to have any direct impact on credit card holders. The changes primarily revolve around interchange rates—the fees merchants pay to process credit card payments—and the ability for merchants to steer customers toward alternative payment methods and impose surcharges on premium credit cards.
However, it remains uncertain whether merchants would choose to charge customers more for using premium cards. Lulu Wang, an assistant professor of finance, suggests that implementing such surcharges could harm customer relationships and potentially deter high-paying customers.
It is also unclear whether merchants will pass down their savings from reduced swipe fees to consumers by lowering