Visa and Mastercard Reach $38 Billion Settlement to Cut Swipe Fees for U.S. Merchants
After two decades of legal battles, Visa and Mastercard agree to reduce transaction fees, offering potential relief for U.S. retailers — but critics question whether consumers will see real savings.
Visa and Mastercard have announced plans to reduce certain fees imposed on merchants in the United States as part of a massive $38 billion legal settlement, following more than two decades of litigation over antitrust violations. The announcement comes as details of the settlement remain under judicial review before it takes effect, according to Newsweek.
The case, ongoing for over twenty years, accused Visa, Mastercard, and several major banks of colluding to fix transaction fees in a way that harmed competition and imposed excessive financial burdens on merchants. While both companies agreed to the settlement, they did not admit to any wrongdoing. No further comments have been provided from the parties involved, though both companies have been contacted for statements.
Transaction fees — commonly known as “swipe fees” — have long been a major concern for retailers, who argue they increase the cost of goods and services for consumers and influence how credit card rewards programs are structured. Any reduction in these fees is expected to have a ripple effect across a wide range of consumer and business transactions.
Visa and Mastercard Settlement Promises Relief for Merchants but Sparks Mixed Reactions
According to the settlement documents, fees are expected to drop by 0.1 percentage points for five years, after averaging about 2.35% last year. The terms also cap the maximum rate at 1.25% for eight years, reflecting a 25% reduction for consumers. In addition, retailers will gain more flexibility in deciding which cards to accept — such as excluding certain premium or reward cards — giving them more control over transaction costs.
This settlement follows a failed $30 billion deal last year that was rejected for not providing sufficient relief to merchants and for maintaining restrictive card-acceptance rules. The new proposal claims to offer greater flexibility and could save merchants an estimated $200 billion over the course of the agreement.
Mixed Reactions Emerge as Visa and Mastercard Settlement Faces Court Approval
For consumers, the changes could mean that some stores might add surcharges for credit card payments, depending on how merchants implement the new policies. Certain credit cards could also be declined at specific retailers, limiting customer options. However, lower merchant fees may ease operational costs, though experts predict that credit card rewards programs may shrink due to the reduced revenue from fees.
Reactions have been mixed. Visa praised the deal, calling it “a meaningful step that provides relief, flexibility, and broader choice” for merchants. Retail associations, however, criticized the settlement, arguing it does not ensure a real reduction in fees and fails to grant merchants the right to negotiate prices directly with banks. Critics also warned that Visa and Mastercard retain too much freedom to raise fees again in the future.
The court must still finalize the settlement before it becomes binding. The long-term impact on the U.S. market will depend on how merchants adapt to the new rules — and whether the lower fees ultimately benefit consumers through reduced prices for goods and services.
