Visa and Mastercard Settle on Merchant Fees
Visa and Mastercard announced on Monday a settlement aimed at reducing the fees that merchants pay to credit card networks.
These fees are incurred with each transaction made by customers, often leading to higher prices for consumers as retailers pass on these charges. Commonly known as swipe or interchange fees, they have become a concern for many, particularly the National Retail Federation (NRF), which argues that these fees are exacerbating inflation and raising living costs for households in the U.S.
Typically, these fees range from 2% to 2.5%. In this new agreement, which puts an end to two decades of litigation, Visa and Mastercard will decrease the fees charged on most credit card transactions in the U.S. by about 0.1% over five years, according to regulatory filings.
This reduction means that merchants will be paying 0.1% less for each transaction. When you think about it, that could mean savings for retailers and consumers, especially when multiplied over millions of transactions.
The NRF has long maintained that swipe fees contribute significantly to retailers’ operating expenses, reportedly adding over $1,200 annually to the average household’s expenses.
Stephanie Maltz, the NRF’s Chief Administrative Officer and General Counsel, criticized the new settlement, arguing that the proposed reduction is “a small fraction of the average 2.35% swipe fee” charged to merchants in 2024. She pointed out that swipe fees have tripled since 2010 and believes the settlement should be rejected.
Furthermore, the National Association of Convenience Stores (NACS) echoed this viewpoint, suggesting that the settlement grants the credit card companies legal protection for raising fees without providing any real benefits to merchants or consumers.
In defense of the agreement, Mastercard stated it provides “the best solution for all parties,” adding that it would enhance clarity, flexibility, and consumer protections. They claim that this partnership will offer smaller merchants more acceptance options and simpler fee structures.
Visa, too, asserted that the settlement would deliver meaningful relief and allow merchants more control over how they accept payments.
The settlement terms will empower merchants by easing the requirement that they must accept all cards from a network if they choose to accept one. For instance, businesses can select whether to accept consumer cards, business cards, or both types.
However, it’s worth noting that while they can choose to accept certain types of cards, the specific issuing banks won’t be selectable. So, if two cards are the same type (say, both are Visa), merchants could accept one but not the other based on the issuing bank.
Before final approval, the agreement needs to be sanctioned by a federal judge in the Eastern District of New York. As it stands, both companies face ongoing lawsuits from merchants regarding their credit card swipe fees, and while these legal battles date back to 2005, neither firm has admitted to any wrongdoing.
Without a doubt, the implementation of these fee changes and card acceptance modifications will hinge on the court’s verdict, which is anticipated to come in late 2026 or early 2027.
