Visa and Mastercard Reach Landmark Deal to Lower Fees for U.S. Merchants

Visa and Mastercard have agreed to a revised settlement that could reshape how U.S. retailers accept credit cards. The payment giants are expected to cut fees and loosen long-standing rules after two decades of legal battles.

The proposed deal, disclosed in a Brooklyn federal court filing, follows years of litigation in which merchants accused the companies of charging excessive 'swipe fees' and violating antitrust laws. The concerned fees typically range from 2% to 2.5% per transaction, hitting a record $187.2 billion last year, according to the Merchant Payments Coalition.

Under the new agreement, Visa and Mastercard will reduce average U.S. credit card interchange fees by 0.1 percentage points for five years. Standard U.S. consumer credit card rates will be capped at 1.25% until the deal expires. One major change involves the 'honor all cards' rule, which previously forced merchants to accept all Visa or Mastercard credit cards.