Credit Card Processing, Legal, News

Visa, Mastercard Settlement & Your Business


July 23, 2023

Visa, Mastercard and several of the nation’s largest banks settled an antitrust suit with a group of seven million retailers.

The suit, which dates back to 2005, accuses the card networks and banks of conspiring to fix interchange fees that businesses pay to process credit and debit cards.

The settlement is seen as a victory by many fighting for interchange reform, but at least three plaintiffs in the case feel it doesn’t go far enough.

Update: December 13, 2013 — According to the Wall Street Journal, a judge cleared the swipe-fee settlement.

What the Settlement Does

The structure of the settlement has several components including cash, a rate reduction, merchant surcharging, and interchange negotiation.

Defendants in the case were ordered to pay $6 billion dollars in cash — a total that may be reduced if some plaintiffs chose not to participate in the settlement. Visa agreed to pay $4.4 billion with Mastercard picking up $800 million.

Temporary Rate Reduction
Many of the plaintiffs in the case received an interchange rate reduction of ten basis points (0.10%) for a period of eight months: a reduction valued at another $1.2 billion dollars.

Early reports indicated that the card networks would maintain a holding account for income generated by the 0.10% rate reduction so it would not be intercepted by merchant service providers.

Allows for Surcharging
Beginning in early 2013, the settlement allowed businesses to impose a surcharge on customers paying with a credit card. Previously, Visa and Mastercard did not allow businesses to pass credit card fees to customers.

Group Negotiate of Interchange
Under the settlement, businesses would be able to band together in an effort to negotiate lower interchange rates.

Reading Between the Lines

Credit card processing fees are confusing, so it’s no surprise that a multi-billion dollar lawsuit on the subject is equally complex. The settlement still needs to be approved by a judge in the Eastern District U.S. Court of New York who can accept the terms, reject the terms, or ask the parties to renegotiate.

Even in its current state the settlement leaves small businesses with a few important points to ponder.

Cash & Rate Reduction
The income a business receives from the initial cash payout and additional temporary rate reduction is relative to the amount of interchange fees the business pays. Large retailers that pay the most in fees will collect the lion’s share of income generated from the cash payout and rate reduction.

Surcharging is Allowed*
However, some states still have a state law that prohibits surcharging credit and debit card transactions.

State law trumps the ruling in the settlement, effectively negating the benefit for businesses in those states.

Joining Forces for Lower Interchange
This component of the settlement has the greatest promise for small businesses. Allowing small businesses to leverage the power of numbers to decrease processing expense is a true victory in this case.

New Fees?
Visa, Mastercard and issuing banks are in business to make money, and they don’t like losing it. If the settlement takes a large enough chunk out of the card brands’ bottom line, new fees may be implemented to make up the difference.

Opponents of the Settlement

Three of the largest plaintiffs in the case against Visa and MasterCard are also the most vocal opponents to the current settlement.

The Association for Convenience & Fuel Retailing (NACS) led the way against the settlement, and was joined by big-box retailer Target on July 23rd. Walmart also chimed in against the settlement on July 24th.


Ben Dwyer

BY Ben Dwyer

Ben Dwyer began his career in the processing industry in 2003 on the sales floor for a Connecticut‐based processor. As he learned more about the inner‐workings of the industry, rampant unethical practices, and lack of assistance available to businesses, he cut ties with his employer and started a blog where he could post accurate information about credit card processing. As the blog gained in popularity, Ben began directly assisting merchants in their search for a processor. Ben believes in empowering businesses by providing access to fair, competitive pricing, accurate information, and continued support. His dedication to transparency and education has made CardFellow a staunch small business advocate in the credit card processing industry.

Please join the conversation

Your email address will not be published.


  1. from Tom Wilson, on August 29, 2013

    Like Target and WalMart, we believe the proposed interchange fee settlement is bad for both retailers and consumers. The proposed settlement would perpetuate a broken system, restrict retailers from any future legal action and offer no long-term relief for retailers or consumers. Further, the proposed settlement would not structurally change the broken market or prohibit credit card networks from continually increasing hidden swipe fees, which already cost consumers tens of billions of dollars each year.

    What most consumers don’t understand is that when their credit card is used fraudulently, it’s the retailer, not the big banks that are left holding the bag… even though the ‘big banks’ provided an authorization code for that card to the retailer.

    Its time for the ‘too big to fail’ big banks to be held accountable.

  2. from Cheryl, on December 29, 2016

    Reside in Washington state. I was charged 50 cents by a merchant for using my credit card. Is this legal?

  3. from Norma Doenecke, on January 2, 2018

    I have just returned from a visit to my dentist, who is now charging a fee for use of a Visa card, in this case $11.00. Whatever happened to cash and checks not being accepted by merchants? Now it is credit cards. It doesn’t take long for “others” to use up your tax reduction does it? I just can’t believe that the credit cards who charge an annual fee can now have consumers pay again for all services with the merchants. Pretty soon we will not be able to shop at all.


Credit Card Processing exposed

Use the secrets that credit card processors don't want
you to know to drastically lower your credit card
processing fees.

Read Now!

You might also like…

minimum credit card charge

View all articles