Clients Claim High Fees Persist Before New Visa Mastercard Deal

The Visa Mastercard settlement has returned to court after the two companies proposed a revised offer worth 38 billion dollars. The deal aims to end 20 years of legal battles with merchants who accused the networks of keeping credit card fees high.

Background on the Antitrust Case

Merchants say Visa and Mastercard and several major banks worked together to maintain high swipe fees. These fees are charged every time a customer pays with a card.
Retail groups, including the National Retail Federation, oppose the new agreement. They argue it does not reduce costs enough. Their concerns match those of Judge Margo Brodie, who rejected a smaller 30 billion dollar deal in 2024.

Swipe fees reached 111.2 billion dollars in 2024. The total rose from 100.8 billion dollars in 2023. The fees are now four times higher than in 2009.

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Key Terms in the Visa Mastercard Settlement

The Visa Mastercard settlement includes several major changes designed to lower costs for merchants.

Lower Swipe Fees for Five Years

Visa and Mastercard plan to cut average swipe fees by 0.1 percentage point for five years. The average rate was 2.35 percent in 2024.

More Choice for Merchants

Merchants will be allowed to choose which types of Visa and Mastercard cards they accept. This change removes the rule that forced businesses to accept all cards from each network.

Fee Cap on Standard Cards

Standard consumer cards will have a fee cap of 1.25 percent for eight years.

More Flexibility on Surcharges

Merchants will be able to impose card surcharges of up to 3 percent.

Visa and Mastercard say these steps provide meaningful support for small businesses.

Predicted Savings for Businesses

Economists Joseph Stiglitz and Keith Leffler estimate that stopping the rise in swipe fees could save merchants 38 billion dollars by 2031. They say broader reforms could increase total savings to 224 billion dollars.
Visa and Mastercard did not admit any wrongdoing. Their stock prices remained steady after the announcement.

Why the Previous Settlement Failed

Judge Brodie rejected the earlier proposal because it kept fees above competitive levels. She said the projected savings of 6 billion dollars per year were too small.
She also opposed the “Honor All Cards” rule. The rule forced merchants to accept every card type from each network. The plaintiffs say the revised settlement addresses this concern.

Mixed Industry Reactions

The Electronic Payments Coalition, which represents major banks, supports the new proposal.
However, critics such as the National Association of Convenience Stores argue that Visa and Mastercard still have too much control over future fees. They also say merchants will still be unable to negotiate prices with individual banks.