What: Visa Inc. and Mastercard Inc. have agreed to a USD 30 billion settlement over credit-card swipe fees with US retailers.

Why it is important: This settlement, pending court approval, promises to reshape the landscape of credit-card transactions in the US. It aims to lower costs for merchants, potentially saving them USD 30 billion over five years, and introduces changes that could affect consumer payment choices. The agreement marks a significant moment in a nearly two-decade-long antitrust legal battle.

After a legal struggle that started in 2005, Visa and Mastercard have reached one of the largest antitrust settlements in history with US merchants, agreeing to cap credit-card swipe fees. This deal could save merchants at least USD 30 billion over five years. Key elements include allowing retailers to impose surcharges for using Visa or Mastercard and to steer customers towards using lower-cost cards. The settlement also necessitates a reduction in swipe fees by at least 4 basis points for three years and ensures that the average system-wide swipe fee for both networks is at least 7 basis points below the current average for five years. This agreement, which still requires court approval, represents a significant shift in the dynamics of credit card transactions, impacting banks, retailers, and consumers alike.

Visa, Mastercard reach USD 30 billion deal with US retailers