Visa and Mastercard have agreed a revised settlement with US merchants that would lower credit card interchange fees and give retailers more control over which card types they accept, potentially ending two decades of antitrust litigation.

Under the proposed deal, the networks said they will reduce the combined average effective credit interchange rate by 10 basis points for five years and cap posted standard consumer credit rates at 1.25 per cent through an eight‑year term following court approval, according to company statements and securities filings. Merchants would also gain wider rights to levy surcharges on card payments and to refuse higher‑cost premium and commercial cards, softening the “honor all cards” requirement.

“After more than 20 years of litigation, Visa and Mastercard have reached a proposed settlement with U.S. merchants of all sizes that would provide meaningful relief, more flexibility and options to control how they accept payments from their customers,” Visa said.

Mastercard said the proposal will particularly help smaller businesses. “We believe that this is the best resolution for all parties, delivering the clarity, flexibility and consumer protections that were sought in this effort,” the company said, adding: “Smaller merchants will gain in this settlement – more acceptance choices, reduced costs and simplified rules.”

The agreement follows a $30 billion proposal rejected by US district judge Margo Brodie in June 2024, who called projected savings “paltry” and criticised the continued obligation for merchants to accept all cards on a network. The new version introduces category‑level acceptance choices – commercial, premium consumer and standard consumer – and expands permitted surcharging up to 3 per cent, subject to disclosure rules.

Industry groups are divided. Richard Hunt, executive chairman of the Electronic Payments Coalition, argued the pact is preferable to legislation. “You tell me the last time Walmart reduced any of its prices by more than 25 per cent, and kept it for eight years,” he said.

Trade bodies representing retailers say the concessions fall short. Stephanie Martz, general counsel at the National Retail Federation, warned that refusing popular rewards cards would be unrealistic: “You can’t just suddenly tell more than 80 per cent of your card customers you’re not going to take their cards.”

Doug Kantor of the National Association of Convenience Stores said the deal lets Visa and Mastercard raise fees they control, adding: “Merchants ought to be able to negotiate and get prices set with different banks, but this settlement prohibits that.”

Visa’s Form 8‑K notes a 10 basis‑point reduction in the combined average effective interchange rate, five‑year caps on posted credit interchange, and an eight‑year 1.25 per cent ceiling for standard consumer credit. The filing also outlines expanded surcharging and an education programme funded with $21 million to help merchants navigate the changes.

The settlement requires court approval in the Eastern District of New York, with Mastercard indicating any approval would most likely occur in late 2026 or early 2027.

---