Visa, Mastercard near settlement in two-decade-long fight with merchants

Retailers have fought for decades to slash their share of the cost for accepting card payments, also known as interchange fees.

Visa Inc. and Mastercard Inc. are close to a new agreement that will attempt to settle a two-decade legal spat with merchants, according to a person with direct knowledge of the matter.

The agreement would be the latest turn in a long-running saga that has seen the credit-card companies offer multiple settlements over the last decade only to see them fail to end the battle. (Unsplash/Representational Image)

The credit card companies will make changes to lower interchange fees by an average of 10 basis points over several years under the terms of the deal, said the person, who asked not to be identified before the agreement was announced. The accord will also loosen rules that require merchants to accept all Visa or Mastercard credit cards if they accept any cards from the network, the person said.

The Wall Street Journal earlier reported details of the potential settlement. Spokespeople for Visa and Mastercard declined to comment.

The agreement would be the latest turn in a long-running saga that has seen the credit-card companies offer multiple settlements over the last decade only to see them fail to end the battle. Last year, a federal judge rejected a proposed deal that would have saved merchants an estimated $30 billion in fees over five years, saying the financial firms could give more ground.

Retailers have fought for decades to slash their share of the cost for accepting card payments, also known as interchange fees. Much of those fees are passed on to the banks that issue the cards, including giants like JPMorgan Chase & Co. and Citigroup Inc.

The 10 basis point drop would be an increase from 7 basis points of savings in last year’s agreement. The potential deal would also allow merchants to impose a surcharge on Mastercard and Visa products, according to the person.

Interchange fees total more than $100 billion annually and are a key driver behind the rewards offered to consumers on premium cards. Some retailers have pushed for more power to not accept such higher-end cards that carry a heftier interchange fee, even if they allow consumers to use more basic Visa and Mastercard credit cards.

The legal fight over credit card swipe fees dates back to at least 2005 — before both Visa and Mastercard were spun off from the banks that owned them to become publicly traded companies.