NEW YORK—Visa and Mastercard are close to a settlement with merchants that would resolve a nearly 20-year legal battle by reducing credit-card fees and giving stores more control over which cards they accept, the Wall Street Journal reported, citing people familiar with the matter.
The proposed deal would lower interchange fees — typically between 2% and 2.5% — by an average of about 0.1 percentage point over several years, according to the report. The card networks would also relax “honor-all-cards” rules that require merchants to accept all of a network’s credit cards if they choose to accept any of them.
A settlement could be announced soon and would require court approval.
Potentially ‘Noticeable Impact’
The changes could have a noticeable impact at checkout. Under the new framework, card acceptance would be divided into categories such as rewards credit cards, non-rewards cards and commercial cards, the Journal reported. That means a store could choose to accept standard Visa cards but reject premium rewards cards, which carry higher fees that fund points, miles and cash-back programs.
However, merchants that refuse rewards cards risk losing customers who prefer them, according to the Journal.
Lawsuit Dates to 2005
As the report explained, the underlying lawsuit, filed in 2005, accused Visa, Mastercard and major banks of anticompetitive practices in setting interchange fees and card-acceptance terms. A previous settlement reached in March 2024 would have lowered fees by roughly 0.07 percentage point for five years and expanded merchants’ ability to add surcharges for credit-card use. A federal judge rejected that agreement. The new proposal would also allow for surcharging, according to the report.
“The case has been complicated by divisions among lawyers representing different merchant groups, including class-action attorneys, large retailers and trade associations,” the Journal reported. “Tensions between merchants and card networks have grown as interchange and related fees have increased. Rewards cards have been a particular flashpoint. Premium rewards cards, which are increasingly popular with consumers, generally carry higher interchange fees because those fees help fund the rewards.”
The report noted that merchants currently cannot refuse rewards cards if they accept other cards from the same network. Banks can also upgrade consumer cards to rewards versions, potentially expanding the number of cards that trigger higher merchant fees.
Consumers Feel Effects
“Consumers have already seen effects of the dispute, as more merchants — especially small businesses — have begun adding checkout surcharges to offset rising fees,” the Journal stated.
Credit-card issuers collected $72 billion in interchange fees tied to Visa and Mastercard in 2023, according to Nilson Report data cited by the Journal. The prospective settlement would reduce those fees for several years, while separate fees collected directly by the networks have increased, the analysis added.
The settlement would not resolve separate lawsuits filed by large merchants seeking monetary damages. Some of those cases could go to trial next year, the Journal report noted.
