Merchants challenge proposed fee caps, arguing settlement fails to address rising payment costs
A US$38bn settlement proposal from Visa and Mastercard could reshape how US merchants pay to accept credit cards, but critics argue it falls short of addressing the core issues that have driven up costs for businesses and, ultimately, consumers.
According to Reuters, the settlement would require Visa and Mastercard to reduce interchange or “swipe” fees by 0.1 percentage point for five years, with standard consumer card rates capped at 1.25 percent for eight years—a reduction of more than 25 percent.
The proposal also gives merchants more flexibility, allowing them to refuse premium cards that typically carry higher fees and to impose surcharges of up to 3 percent when customers pay by card.
Visa and Mastercard, as reported by CNN, maintain that the agreement delivers “meaningful relief, more flexibility and options to control how they accept payments from their customers,” with Mastercard highlighting that “smaller merchants will gain in this settlement—more acceptance choices, reduced costs and simplified rules”.
However, merchant groups such as the US National Retail Federation and the Merchants Payments Coalition have voiced strong opposition.
According to Reuters, these groups argue that the settlement does not go far enough to address the rising cost of swipe fees, which the NRF says reached US$111.2bn in the US in 2024, up from $100.8bn in 2023 and quadruple the level in 2009.
Stephanie Martz, the NRF’s general counsel, stated, “You can’t just suddenly tell more than 80 percent of your card customers you’re not going to take their cards. You would lose a lot of business.”
The NRF described the proposal as “window dressing,” and the National Restaurant Federation called the fee reduction “barely more than last year’s increase”.
The settlement, as reported by Reuters, follows the rejection of a previous US$30bn proposal by US District Judge Margo Brodie, who criticized the earlier deal as “paltry” and inadequate.
The new proposal aims to address concerns over the “Honor All Cards” rule and anti-steering provisions, which merchant plaintiffs argue have prevented businesses from directing customers to cheaper payment options.
Supporters of the settlement, such as the Electronic Payments Coalition, contend that the deal would lower fees beyond what is proposed in pending US Senate legislation.
Yet, as sources familiar with the matter told CNN, the proposal faces widespread opposition and is considered unlikely to be enacted in its current form.
Visa and Mastercard have not admitted any wrongdoing as part of the settlement.
