Visa and Mastercard announced a settlement that will lower interchange fees by 0.1 percentage points over five years and give merchants the right to decline specific card categories, such as rewards, business, and premium consumer cards. The agreement ends a 20‑year antitrust lawsuit that began in 2005 and has cost the networks billions in legal fees.
The settlement follows a March 2024 proposal that a judge rejected for providing insufficient relief. By granting merchants the ability to refuse certain cards, the new deal removes the “Honor All Cards” rule that had forced merchants to accept every card from a network, thereby reducing uncertainty and potential litigation for small and mid‑size retailers.
Financially, the 0.1% fee reduction translates to an estimated $111 million in annual savings for Visa and Mastercard, based on the $111.2 billion in U.S. swipe fees reported in 2024. The reduction is modest relative to total interchange revenue, but it signals a shift toward greater merchant control. The settlement still requires court approval, with the judge expected to rule in the coming weeks.
Both networks emphasized the relief for merchants. A Mastercard spokesperson said the deal “delivers clarity, flexibility and consumer protections” and will benefit small businesses. Visa’s statement highlighted the long‑overdue resolution and the “meaningful relief” merchants will receive, underscoring the networks’ commitment to a more balanced fee structure.
Early market reaction was muted but positive, with Visa and Mastercard shares rising less than 1% in early trading. Investors viewed the settlement as a significant reduction in legal risk and a step toward focusing on innovation amid growing competition from digital wallets and instant‑payment platforms.
Strategically, the settlement allows Visa and Mastercard to redirect resources from litigation toward product development and competitive positioning. While the fee cut is modest, the ability for merchants to reject high‑fee cards could alter usage patterns and revenue streams, making the networks more responsive to merchant preferences and potentially reshaping the U.S. payment landscape.
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