Visa Inc. and Mastercard Inc. have taken a significant step in their long-standing legal battle by agreeing to reduce certain fees charged to merchants and amend rules that have faced criticism from retailers for years. This proposed settlement, reported by Bloomberg, has the potential to save U.S. merchants over $200 billion throughout its duration, positioning it as one of the largest class-action antitrust settlements in American history.
Under the terms of the proposed agreement, the two companies will decrease the average interchange rate, the fees retailers incur when customers use credit cards, by 10 basis points for a period of five years. Additionally, they will cap U.S. consumer credit rates at 125 basis points during the same time frame. Mastercard stated that this resolution strikes a balance that offers clarity, flexibility, and enhanced consumer protections — benefits that particularly favor smaller merchants.
The Merchant Payments Coalition (MPC), a group representing retailers, argues that the proposed reductions in fees may not go far enough. Jennifer Hatcher, a member of the coalition’s executive committee, expressed concerns that the fee cuts would only apply to the portion passed on to banks, allowing the card networks to potentially raise their own fees. Hatcher cautioned that any savings for merchants and consumers could be offset if Visa and Mastercard choose to increase their own charges.
In a related context, credit and debit card swipe fees reached a staggering $187.2 billion last year, causing widespread discontent among retailers who believe that these fees primarily benefit large banks such as JPMorgan Chase & Co., Capital One Financial Corp., and Citigroup Inc.
This settlement follows a previous agreement from last year, which was intended to save merchants an estimated $30 billion over five years but was rejected by U.S. District Judge Margo Brodie in June 2024. The judge raised concerns about the “honor all cards” rule, a policy requiring merchants to accept all types of Visa or Mastercard credit cards if they accept any.
The new settlement proposal would empower merchants with more choice, allowing them to accept cards from three distinct categories: commercial, premium consumer, or standard consumer. This restructuring of card acceptance policies could significantly transform checkout processes across the nation, granting retailers greater control over which transactions they process. The agreement would also enable merchants to impose surcharges on customers using Visa or Mastercard products, a major departure from existing rules.
Experts Joseph Stiglitz and Keith Leffler, who analyzed the situation for retailers, estimated that around $38 billion in savings would stem from the reductions in interchange fees, with the remainder coming from the changes in card acceptance rules and surcharges.
Visa echoed this sentiment, describing the agreement as providing “meaningful relief” after more than two decades of litigation, offering merchants increased flexibility in how they accept customer payments. If approved, this settlement could wrap up one of the most prolonged and significant disputes in the U.S. payments sector, potentially altering the dynamics of how merchants and consumers engage at the checkout.
