Visa and Mastercard are close to a sweeping legal settlement with merchants that would trim credit-card fees and give stores new power to refuse certain cards — a shift that could change how consumers use high-reward plastic at the register.
People familiar with the talks say the agreement would resolve a two-decade antitrust case brought by merchants over “interchange” fees and card-acceptance rules. The proposal would modestly reduce the fees stores pay when customers use credit cards and relax longstanding requirements that retailers accept virtually all cards from a network if they take any.
Interchange fees, typically around 2% to 2.5% per transaction, would fall by about 0.1 percentage point on average over several years. Though relatively small per purchase, those cuts could add up: banks and other issuers of Visa and Mastercard credit cards collected $72 billion in interchange fees in 2023, according to trade publication the Nilson Report.
Under the emerging framework, merchants could decide which categories of cards they will take, such as rewards cards, non-rewards cards, or commercial cards. That would mark a major change from current rules, which generally prevent a store from accepting basic Visa credit cards while rejecting premium, high-fee rewards cards.
Some retailers might choose to stop taking the costliest rewards cards, which have surged in popularity with consumers but carry higher interchange rates. Doing so could cut expenses but risk alienating customers who favor those cards for points, miles, or cash back.
The settlement discussions follow an earlier agreement reached in March 2024 that would have slightly lowered fees and expanded merchants’ ability to add credit-card surcharges. A judge rejected that deal, and surcharging is again part of the new negotiations.
Tensions between card networks and merchants have escalated as fees climbed and more businesses — particularly small ones — began passing those costs directly to customers through checkout surcharges. Premium rewards cards have been a central flash point, since their generous perks are partly funded by the higher fees merchants pay.
Any deal would still need court approval and would not stop separate lawsuits large retailers are pursuing against Visa, Mastercard, and major issuing banks, in which they are seeking monetary damages tied to past fee and acceptance rules.
Source: WSJ