Visa and Mastercard strike revised deal to lower swipe fees in 20-year merchant battle

11 November 2025

In a development that may reshape how America shops and pays, Visa and Mastercard have reached a revised settlement with U.S. merchants following two decades of litigation, agreeing to do more than previously proposed to ease the burden of so-called “swipe fees.”

The long-running dispute stems from allegations that Visa and Mastercard, together with issuing banks, colluded to inflate interchange fees charges merchants pay each time a customer uses a card and used network rules to prevent retailers from steering consumers towards lower-cost payment methods. The previous settlement framework, valued at approximately $30 billion, was rejected by U.S. District Judge Margo Brodie in June 2024 for failing to sufficiently cut fees and still forcing the “honour all cards” rule on merchants.

Under the new proposal, the card networks will reduce typical swipe fees which currently range between 2 % and 2.5 % of a transaction by 0.1 percentage points over five years. Retailers will also gain more flexibility with card-acceptance rules: they can decline certain categories such as premium consumer cards or commercial cards and apply surcharges when appropriate. In a significant change, standard consumer cards would be capped at 1.25 % for eight years.

From Visa’s and Mastercard’s standpoint the deal is a milestone. Both described the agreement as meaningful relief for retailers, particularly smaller ones, providing new choices and lower cost burdens. Visa stated the proposed settlement would offer “meaningful relief, more flexibility and options to control how they accept payments.” Mastercard echoed the sentiment, emphasising the benefit to smaller merchants in particular.

Despite these assurances the reaction from merchant-trade bodies and industry critics was mixed. The National Retail Federation (NRF) and the Merchants Payments Coalition argued the reduction is too modest and fails to solve core issues, such as the dominance of high-fee reward cards which 80 % or more of consumers use. Many believe the real relief would come from broader structural competition and regulatory reform not just a small fee cut and new labels on acceptance rules.

Looking at the bigger picture the settlement marks a potentially pivotal moment for U.S. retail and payment infrastructure. For years merchants have absorbed high interchange costs which they argue contribute to higher consumer prices and blunt their margins. Reducing fees and providing greater choice could translate into lower prices, higher margins or greater investment in consumer experience. But the magnitude of benefit remains to be proven. $111.2 billion in interchange fees were paid in the U.S. in 2024 alone up from $100.8 billion in 2023.

For consumers the impact may be subtle. Most everyday shoppers may not notice a fee reduction of one-tenth of a percentage point in their point-of-sale interaction. However if merchants pass on savings, alter surcharges, or steer toward lower-cost cards, the downstream effect could touch pricing, card-rewards logic or even consumer behaviour. For premium-card users the ability of some merchants to reject certain card categories could introduce new friction in payments.

From an investor and payment-industry perspective the deal also signals transition. It suggests that regulatory and competitive pressure on card networks is growing, and that payment economics in the U.S. may finally shift from network-driven fees toward broader, more diversified models. How this plays out will depend on rollout timelines (court approval is required, likely late 2026 or early 2027) and the response of card issuers, banks and merchants.

Still several uncertainties remain. Whether the settlement will receive court approval is one question. How the new rules will be implemented, how much savings merchants will capture, and how card networks and banks will respond are all open. Critics warn that without structural competition the networks may still raise fees or workaround the safeguards over time.

In sum the revised Visa and Mastercard deal is a major step in the evolution of payment-card economics in the United States, a two-decade dispute partially resolved, but one whose true impact will be measured over years rather than months. Whether retailers gain real-world relief, consumers benefit indirectly, and networks adapt meaningfully remains to be seen. A new payments era may be opening, yet the narrative of fees, flexibility and power balance is still unfolding.