Visa and Mastercard recently submitted a revised $38 billion settlement proposal to end a 20-year legal battle with merchants over credit card processing fees.
The Eastern District Court of New York will review this new agreement after U.S. District Judge Margo Brodie rejected a previous settlement in 2024. This class action lawsuit focuses on interchange fees, the charges merchants pay every time customers swipe their credit cards.
You don’t have to wait until the settlement finalizes to save on processing fees. DirectPayNet can power your business with negotiable terms.
What Is the Visa Mastercard Settlement About?
The district court will review a settlement that covers two decades of litigation involving Visa and Mastercard’s fee structure. Merchants filed this class action lawsuit arguing that the card networks violated federal antitrust law by charging excessive swipe fees.
Cases involving interchange fees have moved through trial courts for years, with both civil and criminal cases challenging how Visa and Mastercard set their rates.
District judges previously rejected settlement attempts because they didn’t address the price-setting structure. The current proposal arose from 15 months of negotiations with an independent mediator. Courts include the Eastern District Court of New York, where attorneys submitted a 527-page filing seeking preliminary approval.
How Will This Settlement Change Credit Card Processing Fees?
Visa and Mastercard agreed to reduce the average effective interchange rate by 10 basis points (0.1%) for five years. The settlement caps standard consumer credit card rates at 1.25% for eight years. This is a noteworthy increase from the previous settlement proposal, which only offered a 0.04% reduction.
The settlement breaks credit cards into three categories:
- standard consumer cards
- premium rewards cards
- commercial cards
Merchants can now choose which categories they accept, giving businesses more control over their processing costs. Additionally, the agreement simplifies surcharging rules, allowing merchants to pass higher fees directly to customers using premium rewards cards.
What Does This Mean for Your Business?
Business owners gain expanded acceptance flexibility under this settlement. You can reject high-fee rewards cards without accepting all Visa and Mastercard products. This change modifies the “honor all cards” rule that previously required merchants to accept every card type if they accepted any Visa or Mastercard.
However, the temporary nature of these fee reductions means long-term savings are uncertain. The 10 basis point reduction expires after five years, and merchants who accept all card types will still pay higher fees for premium rewards cards.
Some merchant groups already oppose the settlement, calling it “all window dressing and no substance” because it doesn’t eliminate Visa and Mastercard’s practice of centrally setting swipe fees.
PAYING TOO MUCH IN FEES? WE CAN HELP
How Can You Save on Processing Fees Right Now?
You don’t need to wait for the district court to approve this settlement to reduce your payment processing costs. DirectPayNet helps merchants negotiate better terms with their payment processors, eliminating unnecessary fees and reducing others. We give you the power to customize your payment processing for your exact needs without paying for bloat.
We focus on analyzing your current fee structure and identifying opportunities for savings across interchange fees, assessment fees, and processor markups. While Visa and Mastercard control interchange rates, significant savings exist in other areas that processors often obscure with complicated pricing models. We help you understand exactly what you’re paying and negotiate terms that reflect your business’s actual processing needs.
What Happens Next with the Settlement?
The Eastern District Court of New York must approve the settlement before it takes effect. District judges will review whether the agreement adequately addresses the concerns that led to the rejection of previous settlements. Cases involving antitrust claims typically require careful scrutiny from trial courts to ensure they serve the interests of all class members.
Major merchant and retail lobby groups have already announced their opposition to the settlement. These organizations argue that the temporary fee reductions don’t go far enough and that the settlement fails to change how Visa and Mastercard centrally set rates.
Both civil and criminal cases may continue if courts reject this third settlement attempt, potentially extending litigation for several more years.
Should You Take Action Now?
Business owners should review their payment processing agreements regardless of the settlement outcome. Courts include lengthy approval processes for class action settlements, and implementation could take months or years. Even if district judges approve the agreement, the fee reductions only last five years and may not significantly impact your bottom line.
DirectPayNet works with businesses of all sizes to optimize their payment processing costs immediately. We analyze your interchange fees, identify savings opportunities, and negotiate directly with processors on your behalf. You gain transparency into your costs and control over your payment processing strategy; benefits that outlast any temporary settlement terms.
Contact DirectPayNet today to discover how much you can save on credit card processing fees without waiting for the courts.