Visa and Mastercard have agreed to a long-awaited settlement that could slightly reduce the fees merchants pay each time a customer swipes a credit card. The deal, which still needs court approval, could eventually impact prices for consumers and reshape how retailers accept payments in the years ahead.
The Deal That Took 20 Years
The proposed agreement would end nearly two decades of litigation over so-called swipe fees, also known as interchange fees. These are the small percentages of each transaction that merchants pay to card networks and banks. The fees typically range between 2% and 2.5%, but under the new deal, Visa and Mastercard would lower them by about one-tenth of a percent for five years.
That means a 0.1% drop per transaction, which could save retailers and consumers millions when spread across billions of purchases. The proposal must still be approved by a federal judge in the Eastern District of New York before taking effect. If approved, the changes are expected to roll out in late 2026 or early 2027.
What It Means for Consumers
While the fees are paid by merchants, most businesses pass them on to consumers through higher prices. The National Retail Federation (NRF) has long argued that swipe fees are one of the biggest hidden costs in the economy, estimating they add more than $1,200 a year in costs for the average U.S. household.
Stephanie Martz, NRF’s chief administrative officer and general counsel, criticized the proposed settlement, calling it too small to make a real difference. “It is a small fraction of the 2.35% average swipe fee charged to merchants in 2024 and equivalent to rolling back fees by only about one year,” Martz said. She added that swipe fees have tripled since 2010, averaging 2.26% in 2023, and said the NRF believes the settlement should be rejected.
Industry Pushback and Support
The National Association of Convenience Stores (NACS) also opposed the deal, warning that it gives Visa and Mastercard “legal immunity to increase fees and anti-competitive practices” while offering little benefit to merchants or consumers.
Visa and Mastercard defended the settlement, calling it a fair compromise that provides clarity and flexibility for all parties.
Mastercard said the agreement is “the best resolution for all parties, delivering the clarity, flexibility and consumer protections that were sought in this effort.” The company added that smaller merchants will gain “more acceptance choices, reduced costs and simplified rules.”
Visa said the proposal “would provide meaningful relief, more flexibility and options to control how [merchants] accept payments from their customers.”
More Power for Merchants
If approved, the agreement would loosen long-standing rules that forced merchants to accept all cards from a given network. Retailers would gain the option to choose whether they accept consumer, business, or premium rewards cards.
However, stores still could not discriminate by bank, meaning a retailer could not accept a Chase Visa but reject a Citi Visa if both are the same card category.
Supporters say this flexibility could help small and mid-sized businesses reduce costs, while critics argue it does not go far enough to break up the dominance Visa and Mastercard hold over the U.S. payments market.
The Bigger Picture for the Economy
Swipe fees have long been a source of tension between retailers and credit card networks. As more consumers shift to cashless payments, the total amount collected from these fees has surged. According to the Nilson Report, merchants paid more than $100 billion in credit card processing fees in 2023 alone.
Economists note that any reduction, even a small one, could help cool inflationary pressure by easing cost burdens for retailers. But with Visa and Mastercard controlling roughly 80% of the U.S. credit card market, the impact for consumers will likely be gradual rather than immediate.
What Comes Next
The proposed settlement would resolve ongoing lawsuits that began in 2005, accusing Visa and Mastercard of setting and enforcing unfair fees and restricting how merchants steer customers toward cheaper payment methods. Neither company admitted wrongdoing as part of the agreement.
If the deal gains court approval, it would mark one of the largest financial settlements in the payments industry’s history. The court’s decision, expected in late 2026 or early 2027, will determine whether the long-running legal battle over swipe fees finally comes to an end.
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