Visa and Mastercard have announced a strategic agreement aimed at reducing the fees they impose on retailers in the United States, marking a significant development in a lengthy dispute with merchants that has persisted for two decades. This initiative follows a federal judge’s rejection of a proposed $30 billion settlement last year.
Under the newly proposed agreement, the card companies will decrease the interchange fees—often referred to as swipe fees—by an average of 0.1 percentage points over a five-year period. Additionally, this settlement will provide merchants enhanced flexibility regarding the types of credit cards they choose to accept, as long as they do not discriminate among different providers.
In the U.S., interchange fees are notably high, averaging approximately 2% on credit card transactions. This rate is significantly higher compared to other regions, such as the European Union, where such fees are regulated and capped. The current settlement awaits final approval from a federal court in New York.
The deal emerges after a previous settlement agreement reached in March 2024, which aimed to lower interchange fees by about 0.07 percentage points, was rejected. Merchants had argued that the earlier agreement would save them around $30 billion.
Visa highlighted that after over 20 years of legal conflicts, this proposed settlement would offer meaningful financial relief to U.S. merchants of all sizes, while also allowing them greater control over payment methods. In contrast, some prominent trade organizations, including the National Retail Federation and the Merchants Payments Coalition, have voiced their dissatisfaction with the proposed terms, asserting that they do not adequately address concerns surrounding swipe fees.
Stephanie Martz, general counsel of the National Retail Federation, pointed out that retailers were hoping for a settlement that would provide more substantial relief, particularly in the context of rising costs.
A contentious aspect of the previously rejected agreement was the “honour all cards” rule, which mandated merchants accepting credit cards to also accept premium and rewards cards that carry significantly higher fees. The new settlement proposes allowing retailers to differentiate among categories of cards, including commercial, premium, and consumer cards. However, Martz criticized this approach, indicating it does not fully address retailers’ needs to selectively accept specific reward cards known for their elevated fees, especially since 85% of card transactions in the U.S. involve reward cards.
Both the National Retail Federation and the Merchants Payments Coalition are advocating for Congressional action on the Credit Card Competition Act, which they estimate could save merchants approximately $17 billion annually by simplifying the process for large banks to handle credit card payments through alternative networks.
