Retailers reject revised proposed swipe fee settlement from Visa, Mastercard
“More smoke and mirrors."
That’s how the National Association of Convenience Stores described the proposed swipe fee settlement introduced on Monday, Nov. 10, by Visa and Mastercard. The settlement, which needs to be approved by a federal judge, is very similar to the settlement offered by the credit card industry in June 2024, according to NACS. That settlement was rejected by U.S. District Judge Margo Brodie at the preliminary stage, an extremely unusual practice that is applied when a settlement lacks sufficient merit to even consider public comments,” noted NACS.
"No one should be fooled by the credit card industry’s smoke and mirrors,” said NACS senior VP of government relations Lyle Beckwith. “This proposed settlement endorses business as usual, including by letting Visa and Mastercard increase their own fees without any restraints. That could erase the benefits that this settlement pretends to provide. Approving this settlement would contradict the ruling that Judge Brodie made just last year and would declare open season for the credit card companies to hit merchants and their customers with more price increases.”
Under the proposed settlement, merchants will have the right to decline some higher-cost Visa and Mastercard-branded credit cards and will gain new rights to add surcharges for accepting some cards, reported CNBC. It also calls for Visa and Mastercard to lower swipe fees, which are now typically 2% to 2.5%, by 0.1 percentage point for five years.
In addition, retailers would be able to choose whether to accept U.S. cards in specific categories including commercial cards, premium consumer cards including many rewards cards and standard consumer cards. The new settlement also calls for a $21 million “merchant education program” to inform the merchants about payment acceptance and cost management.
Swipe fees are most merchants’ highest operating cost after labor and too large to absorb, resulting higher prices, according to the National Retail Federation, which added that total credit and debit card swipe fees hit a record $187.2 billion in 2024, driving up prices almost $1,200 a year for the average family.
The NRF also said the settlement should be rejected, saying it will not benefit merchants and consumers and would provide the credit card giants legal immunity to increase fees and anti-competitive practices.
“This is the third attempt to settle this case and the card industry either just doesn’t get it or just doesn’t care,” NRF chief administrative officer and general counsel Stephanie Martz said. “Once again, this proposal is all window dressing and no substance. The reduction in swipe fees doesn’t begin to go far enough, and the change in the honor-all-cards rule would accomplish nothing. If the courts can’t fix this, it’s time for Congress to take action.”
According to Martz, the fee reduction is inadequate because it’s a small fraction of the 2.35% average swipe fee charged to merchants last year and equivalent to rolling back fees by only about one year — swipe fees averaged 2.26% in 2023. Swipe fee rates have increased by three times as much since 2010, when they averaged 2.02%.
The Retail Industry Leaders Association also voiced its opposition to the proposed settlement.
While addressing certain aspects of the ‘honor all cards’ rules is important, this proposal does nothing to change the underlying duopoly that Visa and Mastercard hold over the market and will still force merchants to accept the highest-costing cards," stated Austen Jensen, RILA’s senior executive VP of public affairs. “This settlement should once again remind Congress of its responsibility to fix an anticompetitive credit card market to lower costs for American retailers, restaurants and other businesses. Congress must finish the job and pass the Credit Card Competition Act to lower costs and bring real competition to a broken system.”
Swipe fees are most merchants’ highest operating cost after labor and too large to absorb, resulting higher prices, according to the NRF. It said that total credit and debit card swipe fees hit a record $187.2 billion in 2024, driving up prices almost $1,200 a year for the average family.