New York, November 12: Visa (V.N) and Mastercard (MA.N) on Monday announced a revised $38 billion settlement with U.S. merchants who accused the payment networks of charging excessive “swipe fees,” seeking to resolve two decades of antitrust litigation after a smaller deal was rejected earlier this year.
The proposed settlement, which requires approval from U.S. District Judge Margo Brodie in Brooklyn, would lower interchange fees charged to merchants for accepting credit cards and give retailers more flexibility in how they accept payments.
Under the deal, Visa and Mastercard would reduce average swipe fees — which stood at about 2.35% in 2024 — by 0.1 percentage point for five years. Standard consumer card rates would be capped at 1.25% for eight years, a reduction of more than 25%. The settlement would also allow merchants to impose surcharges of up to 3% on card payments and choose whether to accept certain types of cards, including premium rewards and commercial cards.
Visa, based in San Francisco, said the agreement provides “meaningful relief” to merchants of all sizes, while Mastercard, headquartered in Purchase, New York, said small businesses stand to gain the most. Neither company admitted wrongdoing. Shares of both companies were little changed in afternoon trading.
The accord follows Judge Brodie’s rejection in June 2024 of an earlier $30 billion deal, which she described as “paltry” because it would have saved merchants only about $6 billion annually and left fee levels higher than they would have been absent the alleged violations.
Despite the expanded terms, major merchant groups including the National Retail Federation (NRF) and the Merchants Payments Coalition said the new proposal still fails to address core issues, including high costs for accepting popular rewards cards and rules requiring retailers to honor all Visa and Mastercard cards.
“You can’t just suddenly tell more than 80% of your card customers you’re not going to take their cards,” NRF general counsel Stephanie Martz said. “You would lose a lot of business.”
According to the NRF, U.S. swipe fees totaled $111.2 billion in 2024, up from $100.8 billion a year earlier and four times the level recorded in 2009.
Economists Joseph Stiglitz and Keith Leffler, retained by the merchant plaintiffs, said the reforms could save merchants $38 billion by 2031 and up to $224 billion overall by breaking what they described as an “upward spiral” in transaction fees and spurring competition in the payments market.
The Electronic Payments Coalition, whose members include Visa, Mastercard, and major banks such as JPMorgan Chase, Citibank, and Capital One, backed the settlement, arguing it would deliver more fee relief than a Senate proposal to regulate card payments.
However, Doug Kantor of the National Association of Convenience Stores, which opposes the deal, said it still gives Visa and Mastercard too much power. “Merchants ought to be able to negotiate and get prices set with different banks, but this settlement prohibits that,” he said.
The case, which has spanned more than 20 years, is one of the largest antitrust disputes in U.S. history, with potential implications for both merchants and consumers who ultimately bear the cost of processing fees through higher prices.
