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Visa, Mastercard reach revised swipe-fee settlement with merchants
Mastercard credit cards.
Benoit Tessier | Reuters
Visa and Mastercard announced a revised settlement with merchants who accused the card networks of charging too much to accept their credit cards, after a judge rejected an earlier $30 billion accord as inadequate.
Monday’s settlement would end 20 years of litigation where businesses accused Visa, Mastercard and banks of conspiring to violate U.S. antitrust laws, including through the card networks’ collection of “swipe fees” to process transactions.
The accord, which requires court approval, calls for Visa and Mastercard to lower swipe fees, which are now typically 2% to 2.5%, by 0.1 percentage points for five years.
Merchants would be allowed to choose whether to accept U.S. cards in specific categories, including commercial cards, premium consumer cards, including many popular “rewards” cards, and standard consumer cards.
Standard consumer rates would be capped at 1.25% until the agreement expires. Merchants would also get more options to impose surcharges when people pay by credit card.
Also known as interchange fees, swipe fees totaled $111.2 billion in the United States in 2024, up from $100.8 billion in 2023 and quadruple the level in 2009, according to the National Retail Federation, the largest U.S. retail trade group.
Visa said the settlement provides merchants “of all sizes” with “meaningful relief, more flexibility and options to control how they accept payments from their customers.”
Mastercard said smaller merchants in particular would benefit from more flexibility, lower costs and simpler rules, with businesses and consumers enjoying a “better payments experience.”
Neither company admitted wrongdoing in agreeing to settle.
Some merchants likely to oppose settlement
The settlement requires approval by U.S. District Judge Margo Brodie in Brooklyn, who rejected the $30 billion accord in June 2024.
That agreement would have lowered swipe fees by about 0.07 percentage points over five years, and also given merchants more room to impose surcharges.
But the judge said fees would remain elevated, and the $6 billion of annual savings for merchants was “paltry” relative to how much Visa and Mastercard could still charge.
She also faulted the accord for sticking merchants with the “Honor All Cards” rule requiring that they accept all Visa and Mastercard cards, or none.
Merchants have long also accused Visa and Mastercard of enforcing “anti-steering” rules that prevent businesses from directing customers toward cheaper means of payment.
Some merchants and trade groups will likely oppose the latest settlement, and some expressed opposition after The Wall Street Journal reported its outlines on Saturday.
The Merchants Payments Coalition said the fee reduction was “minuscule,” and Visa and Mastercard would remain free to raise fees without restrictions once temporary cuts expired.
It also said merchants had “no choice” but to accept rewards cards, which account for 85% of all cards issued, and banks could still shift cards into different categories, effectively requiring merchants to accept all cards.
