After two decades of courtroom battles, Visa and
Mastercard are offering a $38 billion settlement to resolve allegations that
they conspired to overcharge merchants through credit card “swipe fees.”
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Yet, despite the figure, many business groups
argue the proposal fails to solve the problem at the heart of the dispute—how
much it costs to accept a card payment in the United States, Reuters reported.
A Fresh Attempt to Satisfy the Court
The new settlement comes months after U.S. District
Judge Margo Brodie rejected an earlier $30 billion agreement as inadequate. She
called the proposed relief “paltry” compared to what Visa and Mastercard could
continue to collect.
The card networks are now back with a revised offer,
hoping to win approval and end one of the longest-running antitrust cases in
U.S. payments history.
Under the latest proposal, Visa and Mastercard would reportedly lower swipe fees—currently around 2% to 2.5%—by 0.1 percentage point for five
years. Merchants could also opt out of accepting certain categories of cards,
such as premium rewards cards or commercial cards, while standard consumer
rates would be capped at 1.25% for eight years.
The companies say the deal would offer “meaningful
relief” and greater flexibility for merchants. Neither Visa nor Mastercard
admitted wrongdoing. Both firms’ shares remained steady in afternoon trading
following the announcement.
Read more: Visa and Mastercard to Pay Nearly $200M in Decade-Long Merchant Class Action
Merchant groups were quick to reject the new deal. The
National Retail Federation and the Merchants Payments Coalition said it still
leaves businesses paying too much to process card payments.
Swipe fees, also known as interchange fees, totaled
$111.2 billion in 2024, up from $100.8 billion the year before, according to
the NRF. That’s four times higher than in 2009.
Promised Savings Versus Reality
Lawyers representing merchants said the $38 billion
figure represents projected savings through 2031, calculated by Nobel laureate
Joseph Stiglitz and another economist. They estimate the deal could save
merchants more than $200 billion over its lifespan.
In contrast, the Electronic Payments Coalition, which
includes large banks such as JPMorgan Chase, Citibank, and Bank of America,
supports the agreement. Its Executive Chairman Richard Hunt said the settlement
would lower fees beyond what’s proposed in a bipartisan Senate bill seeking to
regulate card costs.
The court must still approve the new deal. If
accepted, it would cap a 20-year dispute that reshaped the debate around how
much merchants pay to accept card payments.
This article was written by Jared Kirui at www.financemagnates.com.
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