Visa and Mastercard have reportedly inched closer to reaching a settlement with US retailers that would see both payment companies reduce the fees charged to merchants.
According to a Wall Street Journal report citing people familiar with the discussions, the potential agreement could also grant merchants greater flexibility in choosing which types of cards to accept. Under the proposal, the payment networks would gradually cut interchange fees, typically ranging between 2% and 2.5% per transaction, by about a tenth of a percentage point on average over several years. These fees, often referred to as ‘swipe fees,’ represent a long-standing source of tension between card issuers and merchants, who have argued that the costs are excessive and limit their ability to steer customers toward cheaper payment options.
Some background on the long-running dispute
The talks are part of efforts to end litigation that began in 2005, when merchants accused the two card networks of using restrictive rules and charging inflated transaction fees. Previous settlements have attempted to resolve similar complaints. In one such case last year, Visa and Mastercard agreed to pay an estimated USD 30 billion to cap merchant card fees, promising to reduce swipe rates by at least 0.04 percentage points for three years and to maintain average rates seven basis points below existing levels for five years.
The new settlement, reportedly being finalised, could divide credit card acceptance into categories, including rewards, non-rewards, and commercial cards. It may also involve changes related to surcharging, allowing retailers to impose extra costs for certain card payments.
It’s worth pointing out that representatives from both Visa and Mastercard declined to comment when contacted by Reuters, and the Wall Street Journal’s report could not be independently verified. Both companies have previously denied any wrongdoing in connection with earlier legal actions.
