Visa and Mastercard have agreed to a revised $38 billion settlement with U.S. merchants after two decades of litigation over credit card fees. The new proposal seeks to resolve allegations that the companies and major banks conspired to overcharge businesses through “swipe fees” — the transaction costs paid each time a card is used. The settlement follows a federal judge’s rejection of a smaller $30 billion deal in 2024 for being inadequate.
If approved by U.S. District Judge Margo Brodie in Brooklyn, the agreement would mark one of the largest antitrust settlements in history, impacting millions of retailers and reshaping the economics of card-based payments in the United States.
Revisions to Swipe Fees and Merchant Choices
The settlement requires Visa and Mastercard to reduce average swipe fees, which were about 2.35% in 2024, by 0.1 percentage point for five years. Standard consumer card rates would be capped at 1.25% for eight years, representing a reduction of more than 25%. Merchants would also gain new flexibility to decide which types of cards to accept — including the ability to exclude high-fee rewards or commercial cards.
In addition, retailers would have broader rights to impose surcharges when customers pay with cards, with an “unfettered” ability to charge up to 3%, according to court documents. Visa said the settlement provides “meaningful relief” for businesses of all sizes, while Mastercard highlighted that smaller merchants stand to benefit most from the changes.
Two economists representing the merchant plaintiffs — Nobel laureate Joseph Stiglitz and University of Washington professor Keith Leffler — estimate that the reforms could save merchants $38 billion by 2031 and unlock $224 billion in competitive benefits across the payments industry.
Merchant Opposition and Ongoing Concerns
Despite the scale of the proposal, several industry groups remain opposed. The National Retail Federation (NRF) and the Merchants Payments Coalition argue that the plan still fails to address key issues identified by Judge Brodie when she rejected the earlier settlement. They say businesses will continue paying excessive fees to accept popular rewards 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, the NRF’s general counsel. “You would lose a lot of business.” According to NRF data, U.S. swipe fees reached $111.2 billion in 2024 — up from $100.8 billion in 2023 and four times higher than in 2009.
Merchant advocates maintain that such fees increase retail prices and limit competition, calling for more fundamental reform to the credit card system.
Judicial Review and Industry Response
The revised deal comes after Judge Brodie criticized the prior $30 billion proposal as “paltry,” saying it failed to bring fees down to levels consistent with a competitive market. The new terms eliminate the “Honor All Cards” rule that forced merchants to accept every Visa and Mastercard product, addressing one of the judge’s major concerns.
The settlement has gained support from the Electronic Payments Coalition, which represents Visa, Mastercard, and major banks including JPMorgan Chase, Citibank, Bank of America, and Capital One. Executive Chairman Richard Hunt said the agreement goes beyond what proposed congressional reforms would have required. “You tell me the last time Walmart reduced any of its prices by more than 25%, and kept it for eight years,” Hunt said.
However, Doug Kantor, general counsel for the National Association of Convenience Stores, said the new terms still favor the card networks. “Merchants ought to be able to negotiate and get prices set with different banks, but this settlement prohibits that,” he said. Visa and Mastercard did not admit wrongdoing in agreeing to settle, and both companies’ shares remained largely unchanged following the announcement.
