The settlement would reduce credit interchange fees for merchants and limit those rates for five years, allow merchants to steer to preferred payment methods and provide funding to educate small businesses about payment acceptance options


Visa and Mastercard reach settlement with merchants. (Credit: Patrick Tomasso on Unsplash)

US payment card companies Visa and Mastercard have reached a settlement with merchants to reduce credit and debit card fees, which could save merchants $30bn over five years.

The settlement, considered one of the largest in the US antitrust history, would reduce credit interchange fees and limit those rates through 2030.

Since 2005, US merchants have been fighting with Visa and Mastercard against charging inflated swipe fees, or interchange fees when shoppers use credit or debit cards.

Also, they accuse payment card networks of barring merchants from directing customers toward cheaper means of payment, through anti-steering rules.

The settlement provides merchants with enhanced flexibility at the point of sale (POS), including the opportunity to steer to preferred payment methods and optionality around surcharging.

It also provides funding for new programs to educate small businesses about payment acceptance options and how to best manage costs.

Visa North America president Kim Lawrence said: “By negotiating directly with merchants, we have reached a settlement with meaningful concessions that address true pain points small businesses have identified.

“Importantly, we are making these concessions while also maintaining the safety, security, innovation, protections, rewards and access to credit that are so important to millions of Americans and to our economy.”

The settlement came one year after the federal appeals court in Manhattan upheld a $5.6bn class action settlement with Visa and Mastercard, covering nearly 12 million merchants.

It requires approval by US District Judge Margo Brodie in New York City’s Brooklyn borough, between late 2024 and early 2025.

If the court approves, the deal will resolve most claims in the litigation and allow some savings to be passed on to consumers through lower prices.

Georgetown University law and finance professor Adam Levitin wrote in an email: “Those merchants might object to Tuesday’s settlement because it would bind them.

“The U.S. merchants would still pay an average 219 basis point swipe fee, the highest in the developed world. If that’s the result of nearly two decades of litigation, then the settlement is a huge loss for U.S. merchants.”