Merchants Gain Card Acceptance Control in $38B Visa-Mastercard Deal, But Critics Warn of Lingering Issues

Visa and Mastercard have reached a landmark $38 billion settlement with U.S. merchants over long-standing disputes about credit card swipe fees, marking the potential end of a 20-year antitrust battle. The agreement, announced November 10, includes reduced interchange fees, relaxed rules on card acceptance, and caps on standard consumer card rates, but has drawn criticism from merchant groups who argue it falls short of addressing systemic issues in the payments industry.

The settlement mandates that Visa and Mastercard lower average interchange fees by 0.1 percentage points (from 2.35% in 2024) for five years and cap standard consumer credit rates at 1.25% for eight years. Merchants will also gain flexibility to choose whether to accept cards in specific categories-commercial, premium rewards, or standard consumer-without being forced to accept all cards from a single network according to reports. This change could allow retailers to reject high-fee premium cards, such as Chase's Sapphire Reserve or Capital One's Venture X, or impose surcharges of up to 3% on their use according to analysis.

Industry experts warn that the shift could disrupt the rewards ecosystem. Premium card users, who spend significantly more than average, may face friction at checkout if merchants opt to surcharge or reject their cards. "If premium cards become more expensive to use at the point of sale, this could curtail the upward spiral of rewards and benefits consumers have come to expect," said John Cabell, a payments analyst at J.D. Power according to reports. However, some analysts, like Brian Kelly of The Points Guy, argue that merchants are unlikely to alienate high-spending customers, as the revenue lost from rejecting premium cards could outweigh savings on fees according to analysis.

The settlement also permits merchants to impose surcharges on credit card transactions, a practice already allowed under current rules but now more broadly applicable. Surcharges could disproportionately affect small businesses, which operate on thin margins. The National Retail Federation (NRF) criticized the deal, calling the fee reduction "a small fraction" of the average 2.35% swipe fee and warning that it fails to address anticompetitive practices.

Visa and Mastercard have not admitted wrongdoing as part of the agreement. Both companies emphasized that the settlement provides "meaningful relief" for merchants and consumers while promoting flexibility according to reports. However, the National Grocers Association and other groups argue that the deal protects the payment giants' ability to raise fees in the future, leaving room for continued cost pressures on retailers according to analysis.

The settlement now awaits approval by U.S. District Judge Margo Brodie, who previously rejected a $30 billion agreement in June 2024 as insufficient. If finalized, the changes could take effect as early as late 2026 or 2027 according to forecasts. Meanwhile, lawmakers continue to push for broader reforms, including the bipartisan Credit Card Competition Act, which would require dual-network routing on credit cards to reduce reliance on Visa and Mastercard according to analysis.

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