Key facts
- Visa and Mastercard have reached a preliminary $38 billion settlement in a 20-year legal battle over swipe fees.
- The settlement aims to reduce processing fees for merchants and could allow them to pass costs to consumers.
- Swipe fees would be reduced by 0.1 percentage point for five years.
- Standard consumer card fees would be capped at 1.25% for eight years.
- The "honor all cards" rule, requiring merchants to accept all Visa and Mastercard products, would be removed.
A U.S. district judge has given preliminary approval to a $38 billion settlement between Visa, Mastercard, and millions of merchants, marking a significant step in a legal battle that has spanned two decades. The lawsuit, initially filed in 2005, accused the card networks of charging excessive "swipe fees" or interchange fees.
If the settlement receives final approval, Visa and Mastercard have agreed to reduce swipe fees by 0.1 percentage point for five years. Additionally, standard consumer card fees will be capped at 1.25% for eight years, a reduction from the average 2.35% merchants paid in 2024. The settlement also eliminates the "honor all cards" rule, which previously required merchants to accept all Visa and Mastercard products, potentially allowing them to decline higher-cost rewards or commercial cards.
Furthermore, the agreement may permit merchants to pass additional processing costs directly to customers through surcharges on certain cards or discounts for alternative payment methods. However, the National Retail Federation has voiced disappointment, arguing the settlement offers insufficient relief and does not fundamentally alter the system controlled by Visa and Mastercard. The group intends to participate in the next phase of the proceedings.