Visa, Mastercard Settle Antitrust Suit Over Swipe Fees

Visa and MasterCard have reached a settlement with U.S. merchants concerning swipe fees, a move that could lead to significant savings for consumers amounting to tens of billions of dollars.

Swipe fees, charged by Visa, MasterCard, and other credit card issuers for facilitating transactions, are typically passed on to consumers by merchants when they use credit or debit cards.

The agreement announced on Tuesday includes a provision for Visa and MasterCard to limit credit interchange fees until 2030, with an obligation to negotiate these fees with groups of merchants.

This settlement is an outcome of a lawsuit initiated in 2005, where it was claimed that merchants were subject to unfairly high fees for accepting Visa and MasterCard payments, accusing both companies and their affiliated banks of breaching antitrust regulations.

In a significant move in 2018, Visa and MasterCard consented to a $6.2 billion settlement as part of this protracted litigation, initiated by a consortium of 19 merchants. This lawsuit had two unresolved issues: one concerning the rules imposed by Visa and MasterCard on merchants for card acceptance, and the other related to merchants who opted out of the 2018 settlement.

Visa highlighted that the current settlement largely benefits small businesses, with more than 90% of the merchants involved being small entities.

While MasterCard made no admission of wrongdoing as part of the agreement, the changes stipulated by the settlement are expected to be implemented following the settlement’s approval, projected to occur in late 2024 or early 2025.

The settlement awaits the final green light from the Eastern District Court of New York.