Visa and Mastercard have announced a new settlement with merchants who accused them of excessive charges for credit card acceptance. This follows a judge’s rejection of a previous $30 billion settlement for being inadequate.
The settlement, if approved, would conclude 20 years of litigation in which Visa, Mastercard, and banks were accused of violating U.S. antitrust laws, particularly through “swipe fees.”
However, merchant groups are opposing the agreement, arguing it fails to address the concerns raised by U.S. District Judge Margo Brodie, who rejected the earlier settlement in June 2024.
Groups like the National Retail Federation and the Merchants Payments Coalition claim businesses would continue to overpay, particularly for accepting popular rewards cards.
“You can’t simply tell over 80% of your card customers you’re not taking their cards,” said Stephanie Martz, NRF’s general counsel. “It would result in significant business loss.”
Swipe fees, also known as interchange fees, reached $111.2 billion in the U.S. in 2024, up from $100.8 billion in 2023, according to the NRF.
The settlement proposes that Visa and Mastercard reduce swipe fees, currently 2%-2.5%, by 0.1 percentage point for five years.
Merchants could choose whether to accept U.S. cards in specific categories, including commercial, premium consumer, and standard consumer cards.
Standard consumer rates would be capped at 1.25% for eight years, a reduction of more than 25%. Merchants would also have more options to impose surcharges for card payments.
The settlement’s estimated value is unclear but expected to exceed $30 billion. Lawyers for supporting merchants haven’t commented.
Visa, based in San Francisco, claims the settlement offers meaningful relief and flexibility to merchants.
Mastercard, based in Purchase, New York, highlights benefits for smaller merchants with lower costs and simpler rules.
Neither company admitted wrongdoing in the settlement. Their shares rose slightly in late morning trading.
The previous $30 billion settlement aimed to reduce swipe fees by 0.07 percentage points over five years and allowed more merchant surcharges.
Judge Brodie criticized the previous accord for keeping fees above levels without antitrust violations, calling $6 billion in annual savings “paltry.”
She also criticized the “Honor All Cards” rule requiring merchants to accept all Visa and Mastercard cards.
Merchants have long accused Visa and Mastercard of “anti-steering” rules, preventing cheaper payment options.
The Electronic Payments Coalition, including card networks and major issuers like Bank of America, supports the settlement.
Executive Chairman Richard Hunt argued the accord would lower swipe fees below those in a Senate bill opposed by much of the banking industry.
“Tell me the last time Walmart reduced any prices by more than 25% for eight years,” Hunt said.
Doug Kantor, general counsel of the National Association of Convenience Stores, contended the settlement lacks incentives for banks to lower rates but allows Visa and Mastercard to raise theirs.
“Merchants should negotiate rates with different banks, but this settlement prohibits it,” Kantor said.
