A Fresh Settlement After Two Decades of Legal Battles
After nearly 20 years of legal disputes, Visa and Mastercard have agreed to a new settlement with U.S. merchants who accused them of charging excessively high credit card processing fees. The revised accord comes months after a federal judge rejected an earlier $30 billion settlement as insufficient.
The new deal, which still requires court approval, aims to lower costs for merchants and increase flexibility in how they accept card payments.
Key Terms of the Revised Visa and Mastercard Settlement
Under the proposed agreement:
- Swipe fees, also known as interchange fees, will drop by 0.1 percentage points for five years.
- Standard consumer card rates will be capped at 1.25% until the settlement expires.
- Merchants can choose which categories of Visa and Mastercard cards to accept — including commercial, premium, and standard consumer cards.
- Businesses will gain greater flexibility to add surcharges for credit card payments.
Currently, swipe fees average between 2% and 2.5%, amounting to $111.2 billion in 2024, a sharp rise from $100.8 billion in 2023, according to the National Retail Federation.
Visa and Mastercard Defend the Deal
Visa stated the new settlement offers merchants “meaningful relief, more flexibility, and options to control how they accept payments.”
Similarly, Mastercard said the agreement will help smaller merchants by simplifying rules, lowering costs, and improving the overall payment experience for both businesses and consumers.
Neither company admitted wrongdoing as part of the deal.
Judicial Approval and Industry Reaction
The agreement will now go before U.S. District Judge Margo Brodie in Brooklyn, who previously rejected the $30 billion proposal in June 2024.
Judge Brodie had criticized the prior deal for delivering only “paltry” savings — about $6 billion annually — and for maintaining the “Honor All Cards” rule, which forces merchants to accept all Visa and Mastercard cards or none at all.
Some merchant advocacy groups, including the Merchants Payments Coalition, have already voiced opposition. They argue that the new fee cuts are “minuscule” and that Visa and Mastercard could still raise fees once the temporary reductions expire.
The Ongoing Debate Over Swipe Fees
Merchants have long accused the card networks of anti-competitive practices, including “anti-steering” rules that prevent businesses from directing customers to cheaper payment options like debit or cash.
Despite the revised settlement, critics say the agreement doesn’t go far enough to reform the credit card processing industry, where Visa and Mastercard dominate the U.S. market.
Still, if approved, the new accord could mark a meaningful — if modest — shift toward lower interchange fees and greater merchant choice in payment acceptance.
Conclusion
The Visa and Mastercard swipe fee settlement may bring modest relief to merchants after years of legal wrangling, but skepticism remains. With the U.S. payments ecosystem under increasing scrutiny, this deal could serve as a test case for how regulators and courts balance corporate power and small business fairness.
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