Visa and Mastercard have agreed on a revised $38 billion settlement in a long-running dispute over credit card swipe fees. The settlement follows two decades of litigation, during which merchants argued that the card networks and issuing banks charged excessive fees. These fees, often called interchange fees, are paid by businesses when customers use credit cards for purchases.
The agreement aims to lower the fees merchants pay over the next five years. Specifically, Visa and Mastercard will reduce average swipe fees by 0.1 percentage point. For standard consumer cards, the settlement caps fees at 1.25% for eight years. This cap marks a reduction of more than 25% compared to current rates. Businesses will also gain more control over which categories of cards to accept. They can decide whether to accept commercial cards, premium consumer cards (including many rewards cards), and standard consumer cards separately.
Merchants may impose surcharges up to 3% on customers who pay by card. This change gives sellers broader options to offset costs associated with card acceptance.
Visa and Mastercard presented this deal as meaningful relief for merchants large and small. Economic experts hired by the merchants estimate that the settlement could save businesses $38 billion by 2031 by halting the rise in swipe fees. The experts also suggest the reforms might increase market competition and benefit consumers who indirectly bear the fees through prices.
The $38 billion settlement follows the rejection of a previous $30 billion deal last year by U.S. District Judge Margo Brodie in Brooklyn, New York. The judge described the earlier agreement as insufficient, concerned that fees would still remain too high and that merchants would remain bound by rules forcing them to accept all Visa and Mastercard cards or none. The new settlement addresses some of these concerns by allowing merchants to be selective about card acceptance.
Despite the progress, some merchant groups oppose the revised settlement. They argue that the fees on popular rewards cards will still be too high and worry about losing business if they refuse card types used by most customers. Stephanie Martz, general counsel for the National Retail Federation, warned that rejecting many cards would risk alienating over 80% of customers and harm business sales.
The settlement also faces criticism from groups like the National Association of Convenience Stores. They point out that merchants may lack incentives or negotiating power to push banks for better rates. They worry that Visa and Mastercard could still raise fees unchecked under the agreement.
Supporters include the Electronic Payments Coalition, which counts Visa, Mastercard, and several major banks among its members. The group notes that the settlement’s fee caps are stricter than proposed regulations and stress the rarity of such price reductions lasting eight years.
Visa and Mastercard have not admitted any wrongdoing as part of the deal. Their stock prices showed little change after the announcement.
This settlement aims to bring an end to a legal saga that began around 2005, involving accusations of antitrust violations related to card networks’ fees and rules restricting merchants’ payment options. The judge’s approval of the latest deal will be required to finalize the settlement.
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