- - Visa, Mastercard reach $200 billion deal over swipe fees. Will you see savings?

Medora Lee, USA TODAYNovember 10, 2025 at 7:27 PM

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Visa and Mastercard are offering to lower the fees they charge merchants to accept their credit cards to settle 20 years of litigation, but some merchant groups say it's all "smoke and mirrors" and nothing in the plan will save anyone money.

Under the $200 billion proposal, Visa and Mastercard would lower credit-card interchange fees charged to merchants to process credit cards. The fees, usually between 2% and 2.5%, would drop by 0.1 percentage point, on average, over five years while standard credit card fees would drop to 1.25% for eight years. Merchants would gain surcharging flexibility and those that accept one of a network’s credit cards would no longer have to accept all of them. A court still must approve the settlement.

Visa and Mastercard said the deal would lower costs for merchants and consumers, but retail trade groups scoffed, saying consumers and merchants would end up paying more.

“No one should be fooled by the credit card industry’s smoke and mirrors,” said Lyle Beckwith, senior vice president of government relations at trade group National Association of Convenience Stores (NACS). “This proposed settlement endorses business as usual, including by letting Visa and Mastercard increase their own fees without any restraints.”

What are interchange fees?

Whenever you use your credit card to make a purchase, the store must pay a behind-the-scenes interchange fee (also known as credit card fee or swipe fee) to process that payment. Most of that fee goes to the bank issuing the card, but companies like Visa and Mastercard also receive a smaller fee for processing the payment through their networks.

Fees are charged as a percentage of the total sales amount in each transaction, but the percentage charged to each merchant, whether at a physical store or online, varies. Factors that determine what percentage the merchant is charged include: type of merchant (department store, convenience store, gas station); type of payment technology used by the merchant; whether the purchase is online or in person; and the type of card.

Total credit and debit card swipe fees hit a record $187.2 billion last year, according to the trade group the Merchant Payments Coalition (MPC).

What would this deal mean for consumers?

The deal would save nothing for consumers, said trade groups like National Retail Federation, MPC, National Association of Convenience Stores and Retail Industry Leaders Association.

“The plan to limit interchange fees by only a small fraction does not offset the increases that have occurred over the past several years — let alone the last two decades,” said Austen Jensen, RILA’s senior vice president of public affairs.

“The miniscule reduction proposed in the settlement on bank fees could still allow Visa and Mastercard to be able to raise their own fees without any limits,” said Jennifer Hatcher, Food Industry Association chief public policy officer. “All of the supposed merchant and consumer savings could easily be canceled by Visa and Mastercard increasing their fees.”

Theoretically, consumers could also face confusion and chaos at checkouts. The deal would allow merchants to decide whether to accept credit cards in three distinct categories — commercial, premium consumer and standard consumer. If merchants choose only to accept a certain class of Visa card such as the standard, non-premium that have lower fees, customers with a rewards Visa card would be turned away.

2/23/08 1:22:06 PM -- Tomah, WI --Credit Cards -- Christie Carlson, 34, goes shopping at the Wal-Mart with her two of her children, Tanner, 5 (in cart) and Seth, 7, and boyfriend Mike Serns. Carlson, 34, who says that as living costs -- including gas, groceries -- rise, she's been forced to use her credit cards to make ends meet. As the economy gets worse, she worries that she'll have to rely even more so on plastic. Credit cards are keeping Americans afloat like never before. As the economy worsens, dragging down retirement portfolios and salaries, consumers appear to be turning more than ever before to credit cards to pay for basic necessities. One telltale sign of this trend: While credit card debt is ballooning, consumers are pulling back on discretionary items like furniture and electronics and spending more on groceries and gas, according to government data. A growing number of people are even cashing out on their credit cards and using this money to pay overdue mortgage bills, say credit counselors. It?s not just blue-collar workers, but doctors and professionals who are being hit by the economic squeeze and turning to plastic to make ends meet. A growing body of research shows that consumers are even paying their credit card bills before their mortgage bills and car bills, in a reversal from the historic trend. Photo by Andy Manis, Freelance ORG XMIT: AM 33572 Credit 2/23/2008 Xxx Credit Cards Cover005 Jpg WiWhy has the dispute lasted 20 years?

Litigation began in 2005 when merchants sued Visa and Mastercard over alleged antitrust violations. They accused the two largest credit card processing firms, which set interchange rates, of being a duopoly.

Merchant groups want Congress to pass the Credit Card Competition Act, which would require the largest banks to offer at least two credit card network processing options on their cards, which they said would lower fees for merchants and, ultimately, consumers. But Congress hasn’t reintroduced the legislation this year.

Meanwhile, Visa and Mastercard have been trying to hammer out a deal with merchants in the lawsuit. The latest proposal is its third in two decades. The last two were:

In 2016, an appeals court overturned a $7.25 billion settlement because lawyers representing the merchants had conflicts of interest.

In 2024, a judge rejected a $30 billion settlement plan that would have lowered swipe fees by about 0.07 percentage points over five years and given merchants leeway to impose surcharges. The judge said fees would still remain too high, and the $6 billion of annual savings for merchants was “paltry” relative to how much Visa and Mastercard could still charge. The proposal also didn’t eliminate the “Honor All Cards” rule requiring merchants to accept all Visa and Mastercard cards, or none.

Is the third time a charm?

The settlement still needs court approval.

“It could be four months or so before we find out” whether the court accepts the settlement, said Richard Hunt, executive chairman of the Electronics Payments Coalition, whose members include Visa, Mastercard and large issuers such as Bank of America, Capital One, Chase and Citibank that support the settlement.

But he likes the chances. “Not everyone’s happy so it’s probably a great deal,” he said. “It’s very compelling,” noting merchants would save an estimated $200 billion over the term of this agreement.

“The last number a year ago was $30 billion” in savings, he said.

Medora Lee is a money, markets, and personal finance reporter at USA TODAY. You can reach her at [email protected] and subscribe to our free Daily Money newsletter for personal finance tips and business news every Monday through Friday morning.

This article originally appeared on USA TODAY: Will you save money if a new credit-card swipe fee deal passes?

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