Visa and Mastercard announced a revised settlement with merchants who accused the card networks of charging excessive fees to accept their credit cards after a judge rejected an earlier $30 billion accord as inadequate.
Monday’s settlement would conclude 20 years of litigation in which businesses accused Visa, Mastercard, and banks of conspiring to violate U.S. antitrust laws, including through the collection of “swipe fees” by the card networks.
However, the accord is facing opposition from merchant groups who argue it does not address concerns raised by U.S. District Judge Margo Brodie in Brooklyn, New York, whose approval is necessary and who rejected the previous settlement in June 2024.
These groups, including the National Retail Federation, the largest U.S. retail trade group, and the Merchants Payments Coalition, claim businesses would still incur high costs, particularly to accept the popular rewards cards that dominate the card market.
“You can’t just suddenly tell more than 80% of your card customers you’re not going to take their cards,” Stephanie Martz, the NRF’s general counsel, said in an interview. “You would lose a lot of business.”
Also known as interchange fees, swipe fees totaled $111.2 billion in the United States in 2024, up from $100.8 billion in 2023 and quadruple the level in 2009, according to the NRF.
The settlement requires Visa and Mastercard to reduce swipe fees, which currently range from 2% to 2.5%, by 0.1 percentage point for five years.
Merchants would have the option to choose whether to accept U.S. cards in specific categories, including commercial cards, premium consumer cards including many rewards cards, and standard consumer cards.
Standard consumer rates would be capped for eight years at 1.25%, a reduction of more than 25%. Merchants would also gain more options to impose surcharges when customers pay by card.
The estimated settlement value is unclear but is likely to exceed $30 billion. Lawyers for merchants supporting the accord did not immediately respond to requests for comment.
Visa, based in San Francisco, stated the settlement provides merchants of all sizes with meaningful relief, more flexibility, and options to control how customers pay them.
Mastercard, based in Purchase, New York, said smaller merchants, in particular, would benefit from increased flexibility, lower costs, and simpler rules.
Neither company admitted wrongdoing in agreeing to settle. Their shares rose less than 1% in late morning trading.
The $30 billion settlement would have reduced swipe fees by about 0.07 percentage points over five years and also provided merchants with more room to impose surcharges.
However, in rejecting that accord, Brodie noted that fees would remain higher than they would be without the antitrust violations, and the $6 billion of annual savings for merchants was “paltry” compared to how much Visa and Mastercard could still charge.
She also criticized the accord for requiring merchants to adhere to the “Honor All Cards” rule, which mandates that they accept all Visa and Mastercard cards or none.
Merchants have also long accused Visa and Mastercard of enforcing “anti-steering” rules that prevent businesses from directing customers toward cheaper payment methods.
The Electronic Payments Coalition, whose members include the card networks and major issuers such as Bank of America, Capital One, Chase, and Citibank, supports the settlement.
Executive Chairman Richard Hunt stated that the accord would reduce swipe fees below those contemplated in a Senate bill sponsored by Democrat Richard Durbin of Illinois and Republican Roger Marshall of Kansas, which 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,” Hunt said in an interview.
Doug Kantor, general counsel of the National Association of Convenience Stores, argued that the settlement does not incentivize banks to lower the rates they charge but allows Visa and Mastercard “without any limitation” to raise their own.
“Merchants ought to be able to negotiate and get prices set with different banks, but this settlement prohibits that,” Kantor, also a member of the Merchants Payments Coalition’s executive committee, said in an interview.
