Chair of the Committee for a Responsible Federal Budget Maya MacGuineas warns that the country’s $38 trillion debt burden and rising spending are “unsustainable.” He urged lawmakers to pass entitlement reform and restore budget discipline.
Visa and Mastercard announced Monday that they have reached a proposed settlement that would reduce the fees merchants pay to the credit card networks.
Although these fees are paid by the store every time a customer makes a transaction, they are often passed on to the consumer in the form of higher costs for goods and services.
These fees are commonly called swipe fees or interchange fees, which according to the National Retail Federation (NRF), increases inflationary pressure on the U.S. economy, driving up prices for households across the country.
These costs are often between 2% and 2.5%. But under the long-awaited deal, which would end two decades of litigation, Mastercard and Visa agreed to cut the fees companies pay when customers use their credit cards by about one-tenth of a percent on most U.S. credit card purchases for five years, regulator filings show. This means merchants would pay 0.1% less per transaction, which could save retailers and consumers money if spread across millions of purchases.
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The fees are commonly referred to as swipe fees or interchange fees. (Ute Grabowsky/Photothek via Getty Images)
The NRF has long argued that swipe fees are one of the highest operating costs for retailers, raising consumer prices for the average family by more than $1,200 per year.
Stephanie Martz, NRF’s chief administrative officer and general counsel, said the planned reduction announced in Monday’s settlement does not go far enough and that “it is a small fraction of the average 2.35% swipe fee charged to merchants in 2024 and is equivalent to rolling back fees by only about a year.” Martz said swipe fees have increased threefold since 2010 and averaged 2.26% in 2023. She believes the new proposed settlement should be rejected.
The National Association of Convenience Stores (NACS) echoed this sentiment, saying the settlement should be rejected because “it would not benefit merchants and consumers and would provide legal immunity for the credit card giants to raise fees and engage in anti-competitive practices.”
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The National Retail Federation has argued that swipe fees are one of the highest business costs for retailers. (Getty/Getty Images)
With the deal, Mastercard said smaller merchants will get more underwriting choices, lower fees and simplified rules.
“More importantly, it allows us to focus our energy on continuing to give consumers, small businesses and larger merchants what they expect from Mastercard – a better payment experience, strong value and peace of mind,” the company said.
Visa said the proposed settlement would provide “meaningful relief, greater flexibility and options to control how they accept payments from their customers” with U.S. merchants of all sizes.
The terms of the deal would also give merchants more power by relaxing requirements that say if they accept one of the network’s cards, they must accept all of them. For example, stores can choose whether to accept consumer cards, business cards, or both. Within consumer cards, they can decide whether to accept standard cards, premium rewards cards, or both. But merchants can’t choose between banks, meaning they can’t accept a Chase Visa but can decline a Citi Visa if both are the same card type.
The deal must still be approved by a federal judge. (Robert Nickelsberg/Getty Images/Getty Images)
The deal must still be approved by a federal judge in the Eastern District of New York before it becomes final. The settlement would end ongoing litigation between U.S. merchants against Mastercard and Visa, related to interchange fees and merchant regulations. Both companies have been sued by merchants over the way they set and enforce credit card swipe fees, as well as rules that limit how merchants can steer customers to cheaper payment methods. These cases have been going on since 2005. The companies have not admitted to any wrongdoing.
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The changes to the fee system and card acceptance rules are not expected to take effect until the court approves the settlement, which is expected sometime in late 2026 or early 2027.
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