Visa and Mastercard reach settlement to lower merchant swipe fees

Visa and Mastercard announced Monday that they have reached a proposed settlement that would reduce the fees merchants pay to credit card networks.

While the store pays these fees every time a customer makes a transaction, they are often passed on to consumers through higher costs of goods and services.

These fees are commonly referred to as pass-through fees or interchange fees, which the National Retail Federation (NRF) said have added inflationary pressures on the U.S. economy, resulting in higher prices for households across the country.

These fees often range between 2% and 2.5%. But under the long-awaited deal, which will end 20 years of litigation, Mastercard and Visa agreed to reduce the fees the companies pay when customers use their credit cards by about a tenth of a percent on most U.S. credit card purchases for five years, according to regulatory filings. This means merchants will pay 0.1% less per transaction, which could save retailers and consumers money when spread across millions of purchases.

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The NRF has long argued that swipe fees are one of the highest operating expenses for retailers, which it said drives up consumer prices by more than $1,200 annually for the average household.

Stephanie Martz, NRF’s chief administrative officer and general counsel, said the planned reduction announced in Monday’s settlement doesn’t go far enough and is “a small fraction of the average 2.35% rollover fee charged to merchants in 2024 and is equivalent to just one year of rollback fees.” Martz said withdrawal fees have tripled since 2010 and average 2.26% in 2023. She believes the proposed new settlement should be rejected.

The National Association of Convenience Stores (NACS) echoed that sentiment, saying the settlement should be rejected because it “would not benefit merchants and consumers and would provide the credit card giants with legal immunity for increased fees and anti-competitive practices.”

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Mastercard told FOX Business it believes the deal is “the best solution for all parties, providing the clarity, flexibility and consumer protections sought in this effort.”

The National Retail Federation has argued that swipe fees are one of the highest operating expenses for retailers. (Getty/Getty Images)

Through this deal, Mastercard said small merchants will receive more acceptance options, lower costs and simplified rules.

“More than that, it allows us to focus our energies on continuing to give consumers, small businesses and large merchants what they expect from Mastercard – a better payment experience, strong value and peace of mind,” the company said.

Visa said the proposed settlement with U.S. merchants of all sizes “would provide meaningful relief, greater flexibility, and options to control how they accept payments from their customers.”

The terms of the deal will also give merchants more power by relaxing the requirement that if they accept one network card, they will be required to accept all of them. For example, stores can choose to accept consumer cards, business cards, or both. Within Consumer Cards, they can decide whether to accept standard cards, premium rewards cards, or both. But merchants can’t choose between banks, which means they can’t accept Chase Visa but reject Citi Visa if both are the same card type.

The deal still needs approval from a federal judge. (Robert Nickelsburg/Getty Images/Getty Images)

The deal still needs to be approved by a federal judge in the Eastern District of New York before it becomes final. This settlement will resolve U.S. merchants’ ongoing lawsuits against Mastercard and Visa related to interchange fees and merchant rules. Both companies have been sued by merchants over how they set and enforce credit card swiping fees and rules that limit how merchants can steer customers toward cheaper payment methods. These cases have been ongoing since 2005. The companies have not admitted to committing any violations.

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The changes to the fee system and card acceptance rules are not expected to take effect until the court approves the settlement, which is expected to be sometime in late 2026 or early 2027.

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