Visa Inc (NYSE:V, ETR:3V64) and Mastercard Inc (NYSE:MA) have reached a proposed settlement with US merchants aimed at resolving more than two decades of litigation over credit card interchange fees and merchant rules, a deal that could reshape how retailers manage payment costs and how consumers are charged at checkout.
The agreement would reduce the average effective interchange fee merchants pay on US credit card transactions by roughly 10 basis points, or 0.1 percentage point, for five years.
The change, while modest in scale compared to typical fee levels of around 2% to 2.5%, could translate into billions of dollars in potential savings across millions of transactions.
Under the settlement, merchants would also gain greater flexibility in how they handle card payments. They could impose surcharges of up to 3% on Visa or Mastercard transactions, even if they do not apply such fees to cards from other networks.
In addition, the long-standing “honor all cards” rule, which required merchants to accept all Visa or Mastercard credit cards if they accepted any, would be relaxed. Merchants could now choose whether to accept premium or business cards within each network, though they must still treat all issuers equally within a card category.
The deal, which still requires approval from a federal judge, is expected to take effect in late 2026 or early 2027.
Analysts at USB said the proposed agreement moves Visa and Mastercard closer to resolving a major legal overhang without directly affecting their core network fees.
“This settlement follows approximately 20 years of litigation, including a prior March 2024 settlement that was rejected by the Court in June 2024, as well as monetary damages previously settled and/or expected to be settled,” they noted.
The analysts added that Visa and Mastercard’s concessions, including surcharging flexibility and allowing merchants to form collective buying groups, are significant from a policy standpoint but limited in financial impact.
Shares of Visa added 1.2% at about $339 on the deal, while Mastercard stock was up 0.8% at $558.