Visa and Mastercard Settle 20-Year Swipe-Fee Dispute With Merchants
Visa and Mastercard have reached a revised settlement with U.S. merchants who spent two decades accusing the card giants and their partner banks of inflating fees to process credit card payments. The new agreement comes months after a federal judge dismissed an earlier $30 billion proposal, calling it insufficient.
The latest accord aims to end the long-running antitrust battle that began when merchants claimed the card networks conspired to maintain high “swipe fees,” also known as interchange fees. These fees are paid each time a customer swipes or taps a card.
Under the new proposal, Visa and Mastercard would reduce swipe fees, which typically range from 2% to 2.5% by 0.1 percentage point for a period of five years.
Merchants would also gain the right to choose which types of cards to accept. Categories include commercial cards, standard consumer cards, and premium or rewards cards.
Rates for standard consumer cards would be capped at 1.25% for eight years, a reduction of more than 25%. Businesses would also have expanded options to add surcharges when customers pay with credit cards.
Despite the new concessions, some of the nation’s largest merchant groups argue that the deal still falls short of their expectations.
The National Retail Federation (NRF) and the Merchants Payments Coalition, among others, have voiced strong opposition, insisting the settlement fails to address the very concerns that led U.S. District Judge Margo Brodie in Brooklyn to reject the previous version in June 2024.
The previous $30 billion proposed settlement had promised a modest 0.07 percentage point reduction in fees over five years, along with more leeway for merchants to impose surcharges.
Judge Brodie dismissed that version as insufficient, saying it would still leave fees above competitive levels and describing the projected $6 billion in annual merchant savings as “paltry.”
She also criticized the plan’s continuation of the controversial “Honor All Cards” rule, which forces merchants to accept every Visa and Mastercard product—or none at all.
Merchants have also long accused the networks of using “anti-steering” rules to prevent them from encouraging customers to choose cheaper payment methods.
Stephanie Martz, general counsel for the NRF, pointed out the unique position of power that card companies hold over businesses.
“You can’t just suddenly tell more than 80% of your card customers you’re not going to take their cards. You would lose a lot of business.”
According to NRF data, swipe fees in the U.S. totaled $111.2 billion in 2024, up from $100.8 billion in 2023, and roughly four times higher than in 2009.
“This is the third attempt to settle this case, and the card industry either just doesn’t get it or just doesn’t care. Once again, this proposal is all window dressing and no substance. The reduction in swipe fees doesn’t begin to go far enough, and the change in the honor-all-cards rule would accomplish nothing. If the courts can’t fix this, it’s time for Congress to take action.”
Although the overall settlement value has not been disclosed, it’s expected to exceed the earlier deal.
In a statement to CNN, Visa, headquartered in San Francisco, said the agreement will ultimately give businesses more agency over their payment structures.
“After more than 20 years of litigation, Visa and Mastercard have reached a proposed settlement with U.S. merchants of all sizes that would provide meaningful relief, more flexibility and options to control how they accept payments from their customers.”
Mastercard, based in Purchase, New York, echoed the sentiment, noting that “smaller merchants will gain in this settlement – more acceptance choices, reduced costs and simplified rules.”
“Even more, it allows us to focus our energies on continuing to give consumers, small businesses, and larger merchants what they expect from Mastercard – a better payments experience, strong value and peace of mind,” the company told Fox Business.
Neither company admitted wrongdoing as part of the deal. Shares of both card networks rose less than 1% in morning trading.
While retailers remain skeptical, the Electronic Payments Coalition, which represents major card issuers such as Bank of America, Chase, Capital One, and Citibank, is firmly in support of the settlement.
Its executive chairman, Richard Hunt, said the accord would actually reduce swipe fees more effectively than a bipartisan Senate bill proposed by Sen. Richard Durbin (D-Ill.) and Sen. Roger Marshall (R-Kan.), legislation that much of the banking industry opposes.
“You tell me the last time Walmart reduced any of its prices by more than 25%, and kept it for eight years.”
However, Doug Kantor, general counsel for the National Association of Convenience Stores and a member of the Merchants Payments Coalition’s executive committee, argued the deal doesn’t go far enough.
The settlement doesn’t give banks any incentive to lower rates, Kantor said. It lets Visa and Mastercard, “without any limitation,” raise theirs. “Merchants ought to be able to negotiate and get prices set with different banks, but this settlement prohibits that.”
Moumita Basuroychowdhury is a Contributing Reporter at The National Digest. After earning an economics degree at Cornell University, she moved to NYC to pursue her MFA in creative writing. She enjoys reporting on science, business and culture news. You can reach her at moumita.b@thenationaldigest.com.
