Visa & Mastercard Reach Revised $38 Billion Swipe Fee Settlement as Retailers Push Back

Key Takeaways

• Revised Settlement Value: Visa and Mastercard have proposed a $38 billion settlement to resolve long-running swipe fee antitrust litigation.
• Fee Reductions and Caps: The deal would lower interchange fees by 0.1 percentage point for five years and cap standard consumer card fees at 1.25% for eight years.
• Merchant Flexibility: Merchants would gain new options to decline certain high-cost card categories and may apply surcharges up to 3% on card payments.
• Retailer Opposition: Major merchant groups argue the settlement does not sufficiently reduce costs and fails to shift market power in card acceptance.
• Judicial Review Pending: The proposal still requires approval from U.S. District Judge Margo Brodie, who previously rejected a smaller settlement as inadequate.

Deep Dive

Visa and Mastercard have agreed to a revised $38 billion settlement in an effort to resolve more than twenty years of litigation over credit card swipe fees. The card networks are hoping the updated proposal will satisfy U.S. District Judge Margo Brodie, who rejected a smaller settlement last year. Reuters was first to report the new agreement, which immediately drew criticism from several merchant groups who say the deal still doesn’t go far enough.

The case dates back to allegations that Visa, Mastercard, and major issuing banks conspired to overcharge businesses every time customers paid with a credit or debit card. Those fees, known as interchange or swipe fees, have continued to rise even as digital payments have become universal. The National Retail Federation (NRF) estimates U.S. merchants paid $111.2 billion in swipe fees in 2024 alone, up sharply from the year before and more than four times what they paid in 2009.

Critics say the settlement still leaves merchants absorbing most of the costs, especially for the premium, rewards-heavy cards that dominate the market.

“You can’t just suddenly tell more than 80% of your card customers you’re not going to take their cards,” said Stephanie Martz, general counsel for the NRF. “You would lose a lot of business.”

What the Settlement Would Change

Under the proposed terms, Visa and Mastercard would reduce swipe fees by 0.1 percentage point for five years. Standard consumer card fees would be capped for eight years at 1.25 percent, a reduction of more than 25 percent. The settlement would also allow merchants to make more choices about which types of cards they accept, and offer broader latitude to apply surcharges of up to 3 percent when customers pay with a card.

Merchant attorneys say that two economic experts, including Nobel Prize winner Joseph Stiglitz, believe the combined effect of these changes could save businesses more than $200 billion through 2031. Visa and Mastercard described the proposal as a meaningful step toward giving merchants more flexibility and control. Neither company admitted wrongdoing.

Judge Brodie rejected the prior $30 billion settlement in June 2024, saying the relief was too limited and the savings for merchants too small compared with the fees still being charged. She also pointed to the networks’ long-standing “Honor All Cards” rule, which requires merchants to accept all cards from a network or none at all. Merchant groups have long argued that this rule, combined with restrictions on steering customers to cheaper payment options, has kept fees high with little room to negotiate.

Those concerns remain. The National Retail Federation and the Merchants Payments Coalition both signaled that they will oppose the revised deal, arguing that the fee caps and flexibility are too narrow to shift long-term market power.

Industry Support Comes From the Banking Side

Meanwhile, the Electronic Payments Coalition, which counts the card networks and major issuers such as Bank of America, Capital One, Chase, and Citibank as members, supports the settlement. Executive Chairman Richard Hunt argued that it goes further than some legislative proposals aimed at lowering swipe fees.

“You tell me the last time Walmart reduced any of its prices by more than 25 percent, and kept it for eight years,” Hunt said.

But Doug Kantor, general counsel for the National Association of Convenience Stores, countered that the deal still leaves Visa and Mastercard free to adjust the underlying economics in ways that keep merchant costs high.

“Merchants ought to be able to negotiate and get prices set with different banks, but this settlement prohibits that,” he said.

For now, the revised settlement goes back before Judge Brodie, who will determine whether it addresses the concerns she raised previously. The outcome could shape the cost and competition structure of card payments for years to come.

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