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Card processing fees would be lowered for five years

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Merchants can choose what types of cards to accept

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Settlement would replace rejected $30 billion accord

By Jonathan Stempel

NEW YORK, Nov 10 (Reuters) - Visa and Mastercard ( MA )

announced a revised settlement with merchants who accused

the card networks of charging too much to accept their credit

cards, after a judge rejected an earlier $30 billion accord as

inadequate.

Monday's settlement would end 20 years of litigation where

businesses accused Visa, Mastercard ( MA ) and banks of conspiring to

violate U.S. antitrust laws, including through the card

networks' collection of "swipe fees" to process transactions.

The accord, which requires court approval, calls for Visa

and Mastercard ( MA ) to lower swipe fees, which are now typically 2%

to 2.5%, by 0.1 percentage points for five years.

Merchants would be allowed to choose whether to accept U.S.

cards in specific categories including commercial cards, premium

consumer cards including many popular "rewards" cards, and

standard consumer cards.

Standard consumer rates would be capped at 1.25% until the

agreement expires. Merchants would also get more options to

impose surcharges when people pay by credit card.

Also known as interchange fees, swipe fees totaled $111.2

billion in the United States in 2024, up from $100.8 billion in

2023 and quadruple the level in 2009, according to the National

Retail Federation, the largest U.S. retail trade group.

Visa said the settlement provides merchants "of all sizes"

with "meaningful relief, more flexibility and options to control

how they accept payments from their customers."

Mastercard ( MA ) said smaller merchants in particular would

benefit from more flexibility, lower costs and simpler rules,

with businesses and consumers enjoying a "better payments

experience."

Neither company admitted wrongdoing in agreeing to

settle.

SOME MERCHANTS LIKELY TO OPPOSE SETTLEMENT

The settlement requires approval by U.S. District Judge

Margo Brodie in Brooklyn, who rejected the $30 billion accord in

June 2024.

That agreement would have lowered swipe fees by about 0.07

percentage points over five years, and also given merchants more

room to impose surcharges.

But the judge said fees would remain elevated, and the $6

billion of annual savings for merchants was "paltry" relative to

how much Visa and Mastercard ( MA ) could still charge.

She also faulted the accord for sticking merchants with the

"Honor All Cards" rule requiring that they accept all Visa and

Mastercard ( MA ) cards, or none.

Merchants have long also accused Visa and Mastercard ( MA ) of

enforcing "anti-steering" rules that prevent businesses from

directing customers toward cheaper means of payment.

Some merchants and trade groups will likely oppose the

latest settlement, and some expressed opposition after The Wall

Street Journal reported its outlines on Saturday.

The Merchants Payments Coalition said the fee reduction was

"minuscule," and Visa and Mastercard ( MA ) would remain free to raise

fees without restrictions once temporary cuts expired.

It also said merchants had "no choice" but to accept rewards

cards, which account for 85% of all cards issued, and banks

could still shift cards into different categories, effectively

requiring merchants to accept all cards.