A major settlement between Visa, Mastercard, and merchants promises to reduce the swipe fees that retailers pay every time customers use their credit cards. But before you start expecting lower prices at your favorite stores, the reality might be more complicated than it sounds.
Swipe fees have grown dramatically over the past decade and a half. These fees quadrupled from 2010 to 2024, reaching a whopping $111.2 billion for credit cards alone. When you add debit cards to the mix, total card fees hit $187.2 billion in 2024. To put this in perspective, these costs add about $1,200 per year to what the average household pays for goods and services. Younger consumers, including teens, often rely on custodial accounts to begin their financial journeys, which can be impacted by such fee structures.
The proposed settlement sounds promising at first glance. It would reduce interchange fees by about 0.1 percentage points for several years. However, this reduction only rolls back fees by approximately one year’s worth of growth. Given that fees have been climbing for 14 years, this change feels like using a teaspoon to empty an ocean.
The settlement also changes some important rules about which cards merchants must accept. Currently, if a store takes regular credit cards, it must also accept higher-fee cards like rewards cards and commercial cards. The new agreement would let merchants pick and choose which types of cards they want to accept. This represents the third settlement attempt in a lawsuit that merchants first filed back in 2005.
This change could create new headaches for shoppers. Imagine reaching for your favorite cashback card at checkout, only to discover the store doesn’t accept it anymore. Some merchants might also start adding surcharges that vary depending on which card you use.
The National Retail Federation isn’t impressed with the settlement, calling it “window dressing” with “no substance.” They argue that Visa and Mastercard still control how fees are set, which means the fundamental problem remains unsolved.
For consumers hoping this settlement will lead to noticeably lower prices at stores, the disappointing truth is that the fee reduction is probably too small to make much difference in your grocery bill or shopping receipts. The settlement still faces judicial approval before any changes can take effect, leaving the outcome far from certain.
