Visa and Mastercard Reach Swipe-Fee Settlement, Finally!

On November 10, 2025, Visa and Mastercard announced a revised settlement in their long-running legal dispute with U.S. merchants over “swipe” or interchange fees. 

Under the proposed deal, the card networks will reduce average interchange fees by 0.10 percentage points for five years, cap standard consumer credit card rates at 1.25%, and allow merchants more flexibility in which card categories they accept. 

The agreement requires approval from a federal judge in the Eastern District of New York. Neither network has admitted wrongdoing. (Reuters). 

Though this doesn’t directly affect India, it can affect how Visa & Mastercard plan future interchange fee settlements for India. 

What does the Settlement include? 

• Interchange fee reduction: A cut of about 0.10 percentage points (10 basis points) from current rates of ~2-2.5%, sustained for five years. (pymnts). 
• Standard consumer card rate cap: 1.25% for standard consumer credit cards through the term of the agreement. (Yahoo Finance). 
• Honor-All-Cards rule modified: Merchants may now accept or decline Visa/Mastercard credit cards by category: commercial, premium consumer, and standard consumer. 
• Surcharging flexibility: Merchants will gain more options to impose surcharges for credit card use. 
• Rate certainty & cap: Posted U.S. credit interchange rates will be capped for five years; standard consumer rates fixed at or below 1.25%.

A Little about the Lawsuit

The settlement comes for a litigation filed in 2005 by merchants and trade groups, who alleged that Visa, Mastercard, and their issuing banks engaged in anticompetitive practices setting inflated interchange fees and enforcing “honor-all-cards” and “anti-steering” rules that limited merchant flexibility. (PRNewsWire). 

An earlier $30 billion settlement, reached in March 2024, was rejected by U.S. District Judge Margo Brodie in June 2024. The judge found it insufficient to address core concerns raised by merchant groups. (Washington Post) 

How would it impact stakeholders in the US? 

What Visa & Mastercard Said? 

“The proposed settlement with U.S. merchants of all sizes would provide meaningful relief, more flexibility, and options to control how they accept payments from their customers,” said Visa in a public filing. (pymnts).  

“Smaller merchants will gain in this settlement: more acceptance choices, reduced costs, and simpler rules,” said Mastercard, emphasizing expected benefits for businesses and consumers alike. (Reuters). 

Burning Questions & Objections Everyone Has

• The National Retail Federation (NRF), USA, argues that the fee cuts are too small to lower merchant costs meaningfully. Stephanie Martz, NRF’s General Counsel, called the proposal “all window dressing and no substance.” (National Retail Federation).   

• Some merchant groups fear that “premium” reward cards, used widely, will still impose high fees, and merchants may be forced to accept them despite the new categories. (FT). 

• The deal must still be approved by U.S. District Judge Margo Brodie, whose bar forced the earlier settlement to be re-written. (Reuters). 

What this mean in Layman's Terms? 

If you're a merchant, especially a small or independent business, this settlement offers potential relief from rising card-acceptance costs. You’ll have more options to refuse high-fee premium or commercial cards and to surcharge credit card purchases in some cases, but doing so involves business decisions about customer satisfaction and card usage patterns.

If you're a cardholder, rewards cards may become more expensive for merchants to accept, which could translate to restrictions or added fees in some cases. 

However, the settlement doesn’t require rewards programs to change directly. Check your card agreements and statements. Use lower fee cards when you can and monitor your bills.

Editor’s View

This settlement is a partial victory for merchants demanding greater control over what used to be a tightly regulated process. 

The caps and flexibility are necessary reforms, but the actual savings, especially at the point of sale and for consumer card users, are modest. Whether it stands up to legal scrutiny will depend on whether merchants feel empowered and whether networks resist carving out loopholes.

Disclaimer: This news and sources have been curated and reported based on information available across public sources.