Visa and Mastercard have agreed to lower credit card fees paid by merchants in a landmark settlement that follows a legal fight lasting two decades.

Both firms will lower the charges that businesses pay to accept credit card fees – often referred to as ‘swipe fees’ or interchange fees. 

The ruling is one of the largest in US antitrust history and business owners say it could save them $30 billion over five years. 

Robert Eisler, co-lead counsel for the plaintiffs, said in a statement: ‘This settlement achieves our goal of eliminating anti-competitive restraints and providing immediate and meaningful savings to all US merchants, small and large.’

According to the settlement announced Tuesday, Visa and Mastercard will cap the credit interchange fees into 2030, and the companies must negotiate the fees with merchant buying groups.

The deal still needs to be approved by the US District Court for the Eastern District of New York. 

Visa and Mastercard have agreed to lower credit card interchange rates in a landmark settlement that follows two decades of litigation

Merchants paid an estimated $93 billion in Visa and Mastercard fees last year, according to industry publication The Nilson Report – up from about $33 billion in 2012

Retailers have long complained the so-called ‘swipe fees’ they have to pay to process credit card transactions are much higher in the US than just about anywhere else in the world. 

Fees average 2.24 percent of the total transaction in the US but can be as high as 4 percent for premium travel and rewards cards. In the EU, fees were capped at 0.3 percent in 2015.

Industry publication The Nilson Report estimated that merchants paid $93 billion in Visa and Mastercard fees in 2022, up from about $33 billion in 2012.

The two credit card providers control about 83 percent of the US market – meaning they have a monopoly on swipe fees paid by retailers.

Danny Reynolds has run Stephenson’s of Elkhart, a clothing store in Elkhart, Indiana, for nearly 30 years

Although Visa and Mastercard set the fees, it is the banks that issue the cards that collect the most revenue.

For example, JPMorgan Chase collected $31 billion of interchange and merchant processing income last year. After accounting for customer rewards, payments to partners and other costs, it meant the bank netted $4.8 billion in total card income.

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