Visa Mastercard Agree on $30b Settlement – What It Means for Online Merchants - DirectPayNet
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Visa Mastercard Agree on $30b Settlement – What It Means for Online Merchants


In a landmark move that could reshape the landscape of credit card processing, Visa and Mastercard have reached a staggering $30 billion settlement with merchants across the United States. This settlement aims to address long-standing concerns over the exorbitant credit and debit card fees that have burdened retailers, particularly small businesses, for decades.

For online merchants, this settlement could have far-reaching implications, presenting both opportunities and challenges. As the dust settles on this historic agreement, retailers will need to carefully evaluate their pricing strategies and marketing approaches to capitalize on the potential savings and remain competitive in an ever-evolving digital marketplace.

Settlement Details

The $30 billion settlement between Visa, Mastercard, and merchants across the United States is a complex agreement that aims to address long-standing concerns over credit and debit card fees. At its core, the settlement seeks to provide relief to retailers by reducing the swipe fees charged by the two credit card giants.

One of the key provisions of the settlement is the reduction in swipe rates, also known as interchange rates, for a period of three years. During this time, Visa and Mastercard have agreed to lower the fees charged to merchants for processing credit and debit card transactions. Additionally, the settlement ensures that these rates will remain below the current average for a total of five years.

Another significant aspect of the agreement is the removal of anti-steering provisions, which have previously restricted merchants’ ability to encourage customers to use certain payment methods like debit cards or offer discounts based on the type of card used. With these provisions lifted, retailers will have greater flexibility in implementing pricing strategies that could potentially benefit both themselves and their customers.

While the settlement promises relief for merchants, it has also faced criticism from various stakeholders. Some argue that the reductions in swipe fees may not be substantial enough to provide meaningful relief, particularly for smaller businesses. Additionally, concerns have been raised about the potential impact on smaller banks and credit unions, which may face challenges in negotiating favorable deals with larger retailers.

Despite these criticisms, the settlement is widely regarded as a step in the right direction for addressing the long-standing issues surrounding credit card fees. Proponents argue that the potential savings for merchants could lead to lower prices for consumers, increased competition, and a more level playing field for small businesses.

However, the road ahead is not without its challenges. The settlement requires court approval, which is not expected until late 2024 at the earliest. Additionally, some merchants may object to the settlement, as it would bind them to the terms, even if they believe the relief is insufficient. Further litigation and appeals are also possible, prolonging the settlement process and creating uncertainty for all parties involved.

Pricing Strategies for Online Merchants

The Visa Mastercard settlement presents online merchants with a unique opportunity to reevaluate their pricing strategies and potentially pass on savings to customers. With the prospect of reduced credit card fees, retailers have several options to consider, each with its own set of advantages and potential drawbacks.

Permanent Price Reductions

One approach that online merchants could take is to implement permanent price reductions on their products or services. By lowering their prices across the board, retailers could potentially boost sales and customer loyalty by offering more competitive pricing.

This strategy could be particularly appealing to price-conscious consumers and could help merchants gain a competitive edge in the crowded e-commerce landscape.

Increased Discounts and Promotions

Alternatively, online retailers could choose to maintain their regular prices but offer more frequent discounts and promotional deals. This approach would allow merchants to retain their existing pricing structure while still providing customers with opportunities to save.

By strategically timing and promoting these discounts, retailers could drive increased traffic and sales during specific periods or for targeted product lines.

Perceived Discounts

A more controversial strategy that some online merchants may consider is the implementation of perceived discounts. This approach involves adjusting listed prices without actually providing real savings to customers.

While this tactic may attract customers seeking deals, it raises ethical concerns and could potentially damage consumer trust if discovered.

Maintaining Status Quo

Finally, some online merchants may choose to maintain their current pricing strategies and simply absorb the potential savings from reduced credit card fees as increased profit margins. This approach could be appealing to retailers who believe that their customers may not be aware of or influenced by the settlement, or who prioritize short-term profitability over potential long-term gains from price adjustments.

Impact on Small Businesses

Small online retailers and merchants stand to gain substantially from the settlement’s provisions. By reducing swipe rates and ensuring that they remain below the current average for five years, the settlement aims to alleviate the financial burden of credit and debit card fees, which have long been a source of concern for small business owners.

Mary Liz Curtin, who owns two businesses in Clawson, Michigan, expressed relief at the settlement, stating, “I am delighted in anything that will ameliorate the situation. I think this is going to help a little bit.”

For small businesses like Curtin’s, where swipe fees can eat up a significant portion of revenue, the potential savings could translate into increased profitability or the ability to offer more competitive pricing.

Mike Roach, co-owner of Paloma Clothing in Portland, Oregon, echoed similar sentiments, acknowledging that while the settlement may not drastically change bottom lines, it is “a step in the right direction.”

Small businesses have long advocated for relief from the high swipe fees imposed by credit card companies, and this settlement represents a positive step toward addressing their concerns.

Additionally, the removal of anti-steering provisions will give small businesses greater flexibility in implementing pricing strategies and encouraging customers to use payment methods with lower fees, further enhancing their ability to manage costs effectively.

Regardless of the approach taken by merchants, the settlement represents a step toward addressing the long-standing concerns over credit card fees and their potential impact on consumer prices. By fostering increased competition and pricing flexibility, the settlement could ultimately benefit consumers by providing them with more options and potentially lower costs in the long run.


About the author

As President of DirectPayNet, I make it my mission to help merchants find the best payment solutions for their online business, especially if they are categorized as high-risk merchants. I help setup localized payments modes and have tons of other tricks to increase sales! Prior to starting DirectPayNet, I was a Director at MANSEF Inc. (now known as MindGeek), where I led a team dedicated to managing merchant accounts for hundreds of product lines as well as customer service and secondary revenue sources. I am an avid traveler, conference speaker and love to attend any event that allows me to learn about technology. I am fascinated by anything related to digital currency especially Bitcoin and the Blockchain.