Visa and Mastercard Reach New Settlement with Merchants
NEW YORK, Nov. 10 — Visa and MasterCard announced a revised settlement following a judge’s rejection of a previous $30 billion deal that failed to satisfy concerned merchants. The new agreement aims to resolve accusations of excessive fees associated with credit card transactions.
This settlement concludes a lengthy 20-year lawsuit where merchants accused Visa, Mastercard, and financial institutions of colluding to breach U.S. antitrust laws by charging high “swipe fees” for processing card transactions.
However, some retailers have already expressed dissatisfaction with the new terms. They argue it doesn’t adequately tackle the issues raised by U.S. District Judge Margo Brody, who dismissed the earlier settlement in June 2024. This revised agreement still awaits approval.
Total swipe fees in the U.S. reached $111.2 billion in 2024, according to reports, with projections showing that they could exceed $100 billion again soon. The National Retail Federation points out that these figures highlight an ongoing concern over the growing financial burden on merchants.
Reduction of Fees
The proposed settlement stipulates that Visa and Mastercard must lower their swipe fees, which currently range from 2% to 2.5%, by 0.1 percentage points over a period of five years. Merchants will be given the option to select which types of U.S. cards they accept, including categories such as commercial cards and popular rewards cards.
Furthermore, the interest rate for standard consumer cards is capped at 1.25% for an eight-year term, which could allow retailers more flexibility to impose additional charges on credit card transactions.
Visa pointed out that this settlement would provide substantial relief and greater options for merchants of all sizes, enabling them to better manage customer payment methods. MasterCard echoed this sentiment, suggesting that particularly small businesses would gain from reduced costs and streamlined payment processes.
Despite this progress, neither company has admitted to any wrongdoing in this matter, and their stocks experienced slight gains in early trading.
Disappointment with Earlier Proposals
Judge Brody criticized the earlier $30 billion settlement for only slightly reducing swipe fees, estimating the savings for merchants to be minimal compared to what the companies could continue to charge. She also highlighted problematic rules that would force merchants to accept all Visa or MasterCard cards as a condition of the agreement.
Merchants have repeatedly accused the card networks of imposing “anti-steering” rules that limit their ability to direct customers to less costly payment options. Doug Cantor from the National Association of Convenience Stores pointed out that the settlement doesn’t encourage banks to lower their rates, but allows Visa and Mastercard to raise their charges without any limitations.
Given these circumstances, many retailers feel they can’t afford to refuse most of the cards available in the market, as points cards represent over 80% of credit card transactions.
