Visa and MasterCard, along with several issuing banks, settled a longstanding lawsuit with merchants over interchange on Friday.
The settlement is in line with analysts’ previous estimates, which pegged a potential agreement at between $5 billion and $15 billion.
In addition to the fund, the networks have agreed to temporarily reduce for eight months the level of interchange fees by 10 basis points, a benefit estimated by plaintiffs’ attorneys to be worth $1.2 billion.
Visa and MasterCard will also drop so-called “no surcharge” rules, which previously prohibited retailers from tacking on additional fees to the consumer for using a credit card.
But could these concessions open the door for alternative payment technology companies?
In a note to investors, Wedbush analyst Gil B Luria wrote:
We expect EBAY to outperform as it transforms into a payments-driven company and garners V/MA-like multiples. We believe eBay will realize significant value over the next few years as it extends its support of retailers from the online realm onto their entire footprint.
That means that the ecommerce unit of eBay could swoop in and steal business from the card associations.
Retailer surcharging flexibility could open [the] door for PayPal promotions by retailers.
Collective bargaining may improve PayPal’s negotiating power, as one of the largest payers of interchange.
EBAY multiple should expand as closest comparables V and MA get multiple upgrades.