Visa, Mastercard near deal to cut fees in merchant case: sources

Visa and Mastercard are reportedly close to reaching a settlement with US merchants over a legal battle that has lasted two decades, according to the Wall Street Journal.

The potential agreement would lower the fees that stores pay to process card payments and allow merchants more control over which credit cards they accept.

The Wall Street Journal cited people familiar with the matter for this report.

Reuters said it could not independently verify the details.

🔗 Source: Reuters

🧠 Food for thought

Implications, context, and why it matters.

Unclear settlement details make real payment impact hard to gauge

Reports say the settlement cuts about one-tenth of a percentage point for several years. MPC, a merchant advocacy group, pegs the 2024 average swipe fee at 2.35% (the fees merchants pay to accept cards) 1.
The change hits interchange fees only (the per-transaction fees paid to card-issuing banks). There are no limits on network fees (charges paid to card networks such as Visa and Mastercard), so MPC says networks could claw back savings with their own increases 1.
Open questions include duration and phase-in schedule. We also need details on affected card categories plus the court approval timeline to estimate network revenue and merchant savings.

Payment orchestration firms may gain if merchants get new card acceptance controls

Changes to the “honor all cards” rule (a network requirement that if a merchant accepts a network’s cards it must accept all cards on that network) would let a merchant accept or reject categories such as no-rewards credit, rewards credit, or commercial cards. They would still need to take every card within a chosen category 1.
MPC estimates about 85% of cards are rewards cards (which carry higher fees due to richer customer perks). Many merchants would still face high-fee acceptance in practice 1.
Payment technology firms such as payment orchestration providers (software platforms that route and optimize transactions across processors and networks) can build tools for Bank Identification Number (BIN) based filtering, dynamic routing (automatically directing transactions to lower-cost options) between card categories, plus compliance management. The business case hinges on which rule changes clear the court.