Visa (V) and Mastercard (MA), the two biggest U.S. card payment networks, reached a proposed settlement that resolves a lawsuit against the two companies and other defendants filed by merchants in 2005, they said on Monday.
The proposed settlement with U.S. merchants of all sizes would provide a small reduction in interchange fees and would give the merchants more flexibility and options for controlling how they accept payments from their customers. The settlement agrees to reduce the U.S. combined average effective credit interchange rate by 0.1 percentage point for five years.
Other terms include:
- Merchants will have more options to surcharge, including if they don’t surcharge other credit networks.
- Merchants will be able to choose whether to accept U.S. credit cards in distinct categories, such as commercial, premium consumer, and standard consumer.
- The agreement caps the U.S. credit interchange rates for five years. Standard U.S. consumer credit rates will be capped at 125 basis points through the terms of the agreement.
- Visa (V) and Mastercard (MA) will provide a new merchant education program about payment acceptance and cost management.
The settlement is subject to court approval. A previous $30B swipe fee settlement, reached in 2024, was rejected by the court last year, saying it didn’t provide sufficient relief for the merchants.
“We believe that this is the best resolution for all parties, delivering the clarity, flexibility and consumer protections that were sought in this effort,” a Mastercard spokesperson said in an email to Seeking Alpha regarding the latest settlement. “Smaller merchants will gain in this settlement – more acceptance choices, reduced costs and simplified rules.”
Mastercard (MA) stock rose 0.2% and Visa (V) stock gained 0.5% in early Monday trading.
Earlier on Monday, the Wall Street Journal reported that the two card payment networks were close to resolving the legal battle with U.S. merchants.