Mastercard, Visa Reach Settlement With Merchants in Swipe Fee Lawsuit

Mastercard and Visa have reached a class action settlement with U.S. merchants, in a deal that aims to end 20 years of antitrust litigation around swipe fees and restrictions placed on merchants.

The deal will lower credit interchange rates and cap them for five years, Mastercard, Visa and the plaintiffs’ lawyers said in separate press releases issued Tuesday (March 26).

The settlement will also give merchants more choice in how they accept digital payments, including allowing them to steer their customers to the merchants’ preferred payment methods and placing a surcharge on purchases made with credit cards, according to the releases.

Subject to approval by the court, the rules changes will likely be implemented in late 2024 or early 2025, per the releases.

“By negotiating directly with merchants, we have reached a settlement with meaningful concessions that address true pain points small merchants have identified,” Kim Lawrence, president, North America at Visa, said in a Tuesday press release. “Importantly, we are making these concessions while also maintaining the safety, security, innovation, protections, rewards and access to credit that are so important to millions of Americans and to our economy.”

Rob Beard, chief legal officer, general counsel and head of global policy at Mastercard, said in a Tuesday press release: “As the court reviews the settlement, we will focus our energy on continuing to provide consumers, small businesses and all business owners what they expect from Mastercard — a better payments experience, strong value and peace of mind.”

The rollbacks and caps on swipe fees will deliver at least $29.79 billion in savings during the five years after the settlement is approved, the merchants’ lawyers said in a Tuesday press release.

The policy changes included in the settlement are expected to provide “substantially greater additional savings” because merchants will have additional leverage when negotiating with Mastercard and Visa, the release said.

“This settlement is the culmination of eight years of hard-fought litigation and detailed, painstaking negotiations,” Steve Shadowen of Hilliard Shadowen LLP, co-lead counsel, said in the release. “It provides comprehensive market-based solutions to too-high swipe fees, while providing immediate fee relief to merchants as they make these new competitive tools work for them.”

Mastercard and Visa have faced legislation and lawsuits around merchants’ claims that they overcharged merchants on interchange fees and blocked them from steering their customers to other payments that did not charge fees.