A U.S. federal judge has preliminarily approved a revised $38 billion antitrust settlement between Visa and Mastercard regarding credit card processing fees. The deal permits merchants to add surcharges and reject certain high-fee credit cards, while the card networks agreed to minor rate caps over the next five to eight years.
Key Settlement Details.
- Fee Reductions: Visa and Mastercard will reduce average swipe fees by at least 0.04 percentage points for three years, ensuring the system-wide average remains below current levels for five years. Standard credit card interchange rates will be capped at 1.25% for eight years.
- “Honor All Cards” Rule Altered: Merchants can now refuse specific card tiers. This gives retailers the long-sought flexibility to reject expensive premium rewards cards without having to stop accepting a network’s standard consumer cards entirely.
- Surcharges and Steering: Businesses gain the freedom to pass processing costs directly onto consumers or incentivize customers to use lower-cost cards.
Industry Reactions and Next StepsWhile networks and some banking representatives view the compromise as a way to balance the interests of all parties, prominent retail trade groups—such as the National Retail Federation and the Merchants Payments Coalition—opposed the deal. These groups argue that the financial concessions are meager and will essentially force merchants into accepting dominant premium cards at high rates to avoid losing customers.
The court will notify class members and hold a fairness hearing for final approval.
If you are following the impact of this on rewards programs, merchant practices, or the related legislation, I can:
- Detail how credit card reward programs might change as a result.
- Provide an update on alternative legislative efforts like the Credit Card Competition Act.
- Summarize which card tiers are most vulnerable to merchant rejection.
