In the immortal words of Lucille Bluth, the incredibly out-of-touch sitcom matriarch from “Arrested Development”: It’s one banana, how much could it cost? $10?
Not quite, but we’re getting there. For the first time in two decades, Trader Joe’s announced Tuesday that it is raising the price of bananas, to 23 cents each from 19 cents. But fear not, TJ’s shoppers: the grocery chain also announced that it’s lowering the price of almonds by $1, Romaine hearts by 50 cents, and bell peppers by another 50 cents. There’s no word yet on whether TJ’s will raise prices for a case of Chocolate Coated Chocolate Chip Dunker cookies, though, quite frankly, we’d be powerless to resist them even if they did.
That’s no slap on the wrist for excessive swipe fees.
On Tuesday, Visa and Mastercard agreed to a settlement with US merchants that would reduce their income from swipe fees by some $30 billion over the next half-decade. Lawyers for the merchants are calling it one of the largest class action antitrust victories ever.
Here’s My Card
Combined, Visa and Mastercard account for about 690 million of all general-purpose credit cards in circulation in the US, or an 84% market share, according to the most recent annual study on the industry conducted by the Federal Reserve. According to Nilson Report data, total credit card purchase volume in 2022 hit $5.6 trillion, up roughly 20% from the year before, and could rise as high as $6.3 trillion by 2026. That’s allowed Visa and Mastercard to feast on swipe fees, which are usually around 1% to 3% and are calculated by combining a fixed fee with a percentage of the sales total.
Unlike American Express, both credit card titans have effectively blocked small businesses from charging customers extra fees to cover swipe charges. And both companies announced last fall they’d be increasing swipe fees for certain purchases — an increase that could force merchants to pay an additional $502 million each year, according to CMSPI, a consulting company that works with merchants. Visa said its 2023 revenue jumped more than 11% to $32 billion, and its net income climbed more than 15% to $17 billion. Mastercard reported similar double-digit year-over-year gains, albeit to slightly smaller totals.
But that impressive growth may soon come to an end following Tuesday’s class settlement, which started with a lawsuit in 2005:
Under the settlement, Visa and Mastercard have agreed to lower fees by 0.04% and maintain that level through 2030. While small, that cut is still calculated to save merchants around $30 billion in swipe fees over that time.
The settlement also gives small merchants the ability to form groups and negotiate fees directly with the two credit card companies, just as large retailers already do. The settlement also allows small merchants to set different swipe fees for all cards, rather than just by card network.
Not So Fast: “These are extraordinary concessions by Visa, Mastercard, and the banks,” TD Cowen analyst Jaret Seiberg told The Financial Times. The settlement is still subject to final approval by a New York district court, and the changes may not be made until early next year. But an appeals court last year did affirm a nearly $6 billion settlement in a similar case from 2018. Of course, the settlement doesn’t require merchants to pass any of the savings down to the consumer.
Written by Brian Boyle
SPONSORED BY MOTLEY FOOL
The S&P 500 May Be Hovering at an All-Time High…
…but the so-called “Magnificent Seven” have accounted for the lion’s share of market gains.
Plenty of great companies are still trading well, well-below their high water marks.
The Motley Fool, a company known for prescient picks like Amazon in 2002 (up 23,376% since), or Netflix in 2004 (up 33,738% since), has a knack for finding names that could be set for a breakout.
In his annual letter to shareholders, BlackRock CEO Larry Fink highlighted a slight problem with many Americans’ retirement savings: There aren’t any.
The chairman of the world’s largest asset manager called on governments and corporations to provide better financial protections for people exiting the workforce.
Accounts Run Dry
In a 2023 survey from Payroll.org, 78% of Americans reported that they were living paycheck to paycheck, a 6% increase from the previous year. And if having money is tough now, imagine what it will be like when you’re older and no longer working a 9-to-5. That’s what prompted Fink to call retirement one of the mid-21st century’s biggest economic challenges, citing a Census Bureau survey that found nearly half of Americans between 55 and 65 have no savings in personal retirement accounts.
“[Retirement] is a much harder proposition than it was 30 years ago,” Fink said in his letter. “And it’ll be a much harder proposition 30 years from now.”
The billionaire said there’s plenty of money to be had on capital markets, but workers are going to need some serious help from the government and their employers if they ever want to see it:
Fink said businesses should feel obligated to offer their employees matching 401(k) contributions and financial education. Companies should also make it easier for workers to transfer 401(k)’s when they find a new job.
Fink said the country should do everything possible to make investing automatic and praised legislation that had been passed to mitigate savings woes. For example, plenty of states have retirement systems for gig and part-time workers, and next year, the federal government will require employers with 401(k) plans to auto-enroll new workers.
How Old is Old Enough? When the Social Security Act was passed in the 1930s, the retirement age was set at 65 years old. But life expectancy then was only 58, so any money coming your way had a good chance of going to your next of kin. Lengthier twilight years have the potential to bleed Social Security coffers. By 2034, retirees and the disabled might receive only 80% of their benefits with each payment. Fink didn’t explicitly say “raise the age,” but he did ask “When people are regularly living past 90, what should the average retirement age be?”
Krispy Kreme — the bakery known for its gooey, glazed pastries — saw its share price surge more than 40% on Tuesday after it reached a deal to sell its donuts at McDonald’s locations throughout the country.
Freshly Baked
Everyone loves a burger. And everyone loves a donut. Some people even love a burger with donuts for buns. But securing one of each normally involved two drive-thrus; not anymore, though. McDonald’s first partnered with Krispy Kreme in 2022 to sell donuts at 160 McDonald’s outlets in Lexington and Louisville, Kentucky. But customers can soon expect to see the Big Mac and the Original Glazed on McDonald’s menus throughout the US:
The partnership is quite the deal for Krispy Kreme; it gets to expand its distribution without having to build new stores.
Krispy Kreme CEO Josh Charlesworth said the company — which has more than 14,000 locations, storefronts, and kiosks — expects “to more than double our points of access by the end of 2026.”
Donut Holes: The deal is good news for the Charlotte, North Carolina-based chain. After returning to the public markets in 2021, its stock had fallen below its IPO price, partially due to the growing use of weight-loss drugs like Ozempic and Mounjaro, Truist analysts told The Wall Street Journal. Krispy Kreme also owns Insomnia Cookies, a chain that the parent company is potentially looking to sell so it can focus on and expand the core donut business. It also makes sense for McDonald’s to pair up with a donut shop: you can practically fry them donuts in that hot-as-heck coffee.
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Not So Fast: “These are extraordinary concessions by Visa, Mastercard, and the banks,” TD Cowen analyst Jaret Seiberg 
