In a historic move poised to transform the American payments landscape, Visa and Mastercard have reached a monumental settlement with U.S. retailers, concluding a nearly two-decade-long legal battle.

The core of the antitrust lawsuit alleged the card networks colluded to fix interchange, or “swipe,” fees, the costs merchants pay to process credit card transactions. This agreement, emerging after a federal judge rejected a prior $30 billion proposal, aims to introduce modest but meaningful fee reductions and grant merchants unprecedented control over payment acceptance, a shift that could ultimately reconfigure consumer rewards programs and the checkout experience.

The settlement mandates that Visa and Mastercard lower credit card swipe fees by an estimated four basis points, or 0.01%, for a minimum of three years. While this figure appears minor, it represents a significant concession in a multi-billion dollar fee structure. More impactful, however, is the dismantling of long-standing “anti-steering” rules.

The new terms will empower merchants to favor specific, lower-cost payment cards at the point of sale. This means a retailer could potentially decline a high-fee, premium rewards card while still accepting a basic Visa or Mastercard. For consumers, this introduces the potential for new friction, where a favored travel rewards card might not be welcome at certain stores, necessitating a backup payment method.

Furthermore, the deal grants merchants enhanced abilities to implement surcharging programs. Shoppers may encounter more frequent notices of added fees for using premium credit cards or see prominent discounts for using cash, debit, or specific lower-cost credit products.

This newfound flexibility for retailers to steer customers toward cheaper payment options directly challenges the economic model that funds lucrative consumer rewards programs.

Banks and card issuers, facing potential resistance to high-fee cards, may be forced to reevaluate the viability of ultra-premium rewards, potentially leading to a recalibration of benefits in the long term.

While the immediate effect on consumer prices is expected to be subtle, the settlement fundamentally alters the power dynamics between retailers and the payments duopoly, setting the stage for a more competitive and complex checkout environment.

Reuters reported, Despite the proposed settlement, significant opposition from merchant trade groups is already mounting. Doug Kantor, a lead legal representative for the National Association of Convenience Stores, issued a sharp critique, asserting that the agreement fails to address the core issue of pricing competition.

He argued that the deal provides no meaningful incentive for the banks that issue credit cards to actually reduce their interchange rates. More alarmingly, Kantor cautioned that the structure of the settlement leaves Visa and Mastercard themselves with the unchecked ability to raise their network fees in the future.

In an interview, Kantor, who also serves on the executive committee of the Merchants Payments Coalition, emphasized that the fundamental problem remains unresolved. “This settlement effectively prohibits merchants from negotiating prices directly with different banks to secure competitive rates,” he stated, “leaving the centralized fee-setting power of the card networks firmly intact.”