Visa and Mastercard Near Landmark Settlement to Lower Merchant Fees

9 November 2025

In what could become a defining moment for the payments industry, Visa and Mastercard are reportedly on the brink of reaching a settlement with U.S. merchants that would mark the end of a two-decade legal struggle over credit-card fees and acceptance rules. According to a report by the Wall Street Journal, the deal would see the card networks reduce interchange fees commonly referred to as “swipe fees” by roughly 0.10 percentage point over several years, from the typical 2.0 %-2.5 % range.

Under the proposed terms, merchants would also gain greater flexibility in the types of cards they accept. Currently, many retailers are bound by network rules that require them to accept every card in a given network if they accept one. The settlement would allow stores to decline higher-cost cards such as premium rewards or commercial cards while offering the possibility of passing on additional surcharges to cardholders under certain conditions.

This unconventional combination of fee relief and payment-routing freedom has grown out of longstanding frustration among merchants. Retailers have argued for years that interchange fees impose a heavy cost burden, especially for lower-margin businesses, and that rules restricting steering customers toward cheaper payment methods amount to anti-competitive behaviour. The current negotiations stem from litigation that began in 2005 when merchants sued the two card networks and major banks.

If approved by a U.S. federal court, the agreement would not only address merchant complaints but also hint at far-reaching changes in the credit-card framework. Industry observers say that a one-tenth-percentage-point reduction may appear modest, but in a system processing trillions in transactions annually, the ripple effect could be significant. In 2024 alone, U.S. interchange fees collected by issuers surpassed $100 billion.

Another important rewiring feature of the deal lies in the pricing structure. The networks are proposing to categorise cards into distinct buckets standard consumer, no-rewards, premium rewards, and commercial and set different rules for each. That means a merchant might choose to opt out of accepting certain types of expensive cards. While that gives retailers new levers to manage cost, it also introduces potential complexity around consumer experience and cardholder benefits.

From the issuer and cardholder perspective, the settlement raises questions about rewards programs and card design. Premium cards often carry higher costs for merchants and thus higher interchange rates. If those cards become less universally accepted or surcharges grow more common, card issuers may face pressure to adjust annual fees, perks or reward structures. Banks are watching closely.

Merchants have already voiced mixed reactions. Smaller businesses generally welcomed the potential relief from fees and the promise of more control at the checkout counter. At the same time, trade groups representing convenience stores and independent retailers expressed concern that the settlement could still leave room for networks to raise fees in other ways, or fail to secure meaningful long-term change.

Timing is also critical. The deal comes after a previous settlement framework from earlier this year was rejected by a judge who deemed the benefits insufficient. The new version is broader and offers more structural changes. If approved, it would relieve plenty of pressure both on networks and merchants ahead of what could be turbulent years for consumer spending and retail margins.

The proposed settlement is set against a backdrop of changing payment habits and heightened regulatory scrutiny. Consumers are increasingly using mobile wallets, buy-now-pay-later options, and other non-card payment structures. At the same time, regulators in other regions such as the European Union have capped interchange fees altogether. This deal could therefore signal how the U.S. system might evolve to remain competitive while addressing merchant concerns.

For investors and industry watchers the implications are also noteworthy. Lower costs for merchants could lead to lower prices or improved margins, but the impact on banks and card-issuers could be more nuanced. If rewards cards lose value or become less accepted, consumer behaviour may shift, balance sheets might adjust and card portfolios could need recalibration. Meanwhile retailers with regional or small-format operations stand to gain more immediate relief.

In sum, the settlement being negotiated between Visa, Mastercard and the merchant class represents a significant pivot in the payments ecosystem. It blends legal closure with practical reform. For merchants it offers cost relief and greater acceptance flexibility. For consumers the benefits are possible but indirect simpler checkout experiences, possibly lower costs indirectly passed through. For networks and issuers it demands adaptation. The story now turns to whether the deal will gain court approval, how it will be implemented, and how all parties will manage the transition from old norms to a payment landscape reimagined.