Visa and Mastercard have revealed a new agreement with merchants who had accused the card networks of overcharging to accept their credit cards. This revised settlement follows a previous $30 billion deal that was rejected by a judge for being insufficient. The latest agreement aims to resolve 20 years of legal disputes, where businesses alleged that Visa, Mastercard, and banks colluded to violate U.S. antitrust laws by imposing “swipe fees” on transaction processing.
The newly proposed settlement, subject to court approval, involves Visa and Mastercard reducing swipe fees by 0.1 percentage points for five years. Merchants will have the option to accept U.S. cards in specific categories, including commercial cards, premium consumer cards, and standard consumer cards. Standard consumer rates will be capped at 1.25%, and merchants will gain more flexibility to impose surcharges on credit card payments.
In 2024, swipe fees in the U.S. amounted to $111.2 billion, a significant increase from previous years, according to the National Retail Federation. Visa emphasized that the settlement offers meaningful relief and flexibility to merchants of all sizes, while Mastercard highlighted the benefits for smaller businesses, including lower costs and simplified rules for a better payment experience.
Despite agreeing to the settlement, neither Visa nor Mastercard admitted any wrongdoing. The settlement follows the rejection of a previous $30 billion accord in 2024, with the judge criticizing the minimal reduction in swipe fees and the lack of constraints on future fee increases by the card networks. Merchants have also raised concerns about anti-steering rules that restrict them from directing customers to cheaper payment options.
In Canada, a separate settlement was reached in 2023 to limit interchange fees charged by Visa and Mastercard to an average of 0.95%. While this deal aimed to save retailers approximately $1 billion over five years, small business owners criticized its limited applicability. Additionally, a class action lawsuit settlement in 2022 allowed Canadian businesses to pass on credit card fees to customers through a capped surcharge, with Visa and Mastercard agreeing to reimburse companies for years of swipe fees.
