Visa and Mastercard to Lower Merchant Fees

U.S. payment giants Visa (V.N) and Mastercard (MA.N) are reportedly close to reaching a settlement with merchants that would reduce the fees merchants pay for credit and debit card transactions. According to the Wall Street Journal, the agreement would also give merchants more flexibility in choosing which cards to accept, addressing long-standing concerns over restrictive “all-card acceptance” rules.

Under the proposed settlement, interchange fees—typically 2% to 2.5% per transaction—would be trimmed by approximately 0.1 percentage points on average over several years.

---

Changes to Card Acceptance Rules

Currently, merchants who accept one type of card on Visa or Mastercard networks must accept all types, including rewards, no-rewards, and commercial cards. The settlement would ease these rules, allowing merchants to reject certain card types and better manage transaction costs.

The proposed deal would also categorize credit-card acceptance into segments such as rewards cards, no-rewards cards, and commercial cards, giving merchants more control over which card types they choose to process.

---

Background: Legal Battle and Prior Settlement

The settlement would resolve a legal dispute that began in 2005, with merchants claiming that Visa and Mastercard charged excessively high swipe fees or interchange fees and restricted them from steering customers toward cheaper payment options.

In 2024, Visa and Mastercard had agreed to a $30 billion settlement to cap merchant card fees. That deal included cutting swipe rates by at least 0.04 percentage points for three years and maintaining average rates seven basis points below previous levels for five years. Visa and Mastercard denied wrongdoing in that agreement.

---

Potential Implications for Merchants and Consumers

If finalized, the new settlement could:

• Reduce merchant costs on card transactions
• Increase flexibility in card acceptance
• Allow merchants to surcharge or incentivize certain card types
• Potentially influence consumer payment behavior, as merchants adjust for cost savings

Analysts suggest the settlement could help merchants manage rising operational costs, while creating a more transparent and flexible payment ecosystem for both businesses and consumers.

---

Key Takeaways

• Visa and Mastercard are nearing a settlement with merchants to lower fees and ease card acceptance rules.
• Interchange fees would be trimmed by about 0.1 percentage points over several years.
• Merchants would gain more control over which cards to accept, addressing anti-steering concerns.
• The settlement would resolve a legal battle dating back to 2005.
• Potential impacts include lower transaction costs for merchants and improved flexibility in payment options.