Visa, Mastercard Reach New Swipe Fee Settlement With Merchants; Opposition Voiced

Visa and Mastercard announced a revised settlement with merchants who accused the card networks of charging too much to accept their credit cards, after a judge rejected an earlier $30 billion accord as inadequate. Monday’s settlement would end 20 years of litigation in which businesses accused Visa, Mastercard and banks of conspiring to violate U.S. antitrust laws, including through the card networks’ collection of “swipe fees.”

However, the settlement is drawing opposition from merchant groups that say it doesn’t address concerns that U.S. District Judge Margo Brodie in Brooklyn, New York, whose approval is required, raised in rejecting the earlier settlement in June 2024. The The National Retail Federation (NRF), the nation's largest retail trade organization, said the settlement offer should be rejected. 

“This is the third attempt to settle this case and the card industry either just doesn’t get it or just doesn’t care,” NRF Chief Administrative Officer and General Counsel Stephanie Martz said. “Once again, this proposal is all window dressing and no substance. The reduction in swipe fees doesn’t begin to go far enough, and the change in the honor-all-cards rule would accomplish nothing. If the courts can’t fix this, it’s time for Congress to take action.”

Total Retail's Take: In addition to the NRF, the Merchants Payments Coalition as well as the National Grocers Association (NGA) argued that businesses would still pay too much in "swipe fees" to accept the popular credit cards that dominate the market. To provide context to the scale of this issue, swipe fees totaled $111.2 billion in the United States in 2024, up from $100.8 billion in 2023.

The settlement calls for Visa and Mastercard to lower swipe fees, which are now typically 2 percent to 2.5 percent, by 0.1 percentage point for five years.

Retailers have previously accused Visa and Mastercard of enforcing “anti-steering” rules that prevent businesses from directing customers toward cheaper means of payment. They argue that Visa and Mastercard’s honor-all-cards rule violates antitrust laws because it requires merchants who accept regular cards with average or lower swipe fees to also accept rewards cards and commercial cards, which can have swipe fees as high as 4 percent or more. Exacerbating the situation is that 85 percent of credit cards issued today are rewards cards and retailers have no choice but to accept them, according to Martz.

As retailers try to identify alternative payment methods to entice consumers to purchase, they must also weigh the impact on margin such offerings have. Payment choice has to be factored into models to get an accurate picture of how much you're paying to acquire and/or retain a customer.