Visa and Mastercard strike deal to lower merchant fees
In a significant move for the payments industry, Visa and Mastercard have agreed to a settlement with a group of merchants to lower the fees businesses pay when customers use credit cards. This deal aims to ease the financial burden on retailers, who have long complained about high processing costs.
Interchange fees are charges that merchants pay to card networks like Visa and Mastercard for each transaction. These fees, which often range from 2% to 2.5% of the purchase amount, help fund rewards programs and other card benefits. Under the new agreement, these fees will drop by an average of 0.1 percentage points over the next five years. The changes are set to begin in late 2026, pending approval from a federal court.
The settlement also gives merchants more options by relaxing the “honor all cards” rule. This policy previously required stores to accept all cards from a network if they accepted any. Now, retailers may have greater flexibility to choose which cards they accept, potentially encouraging competition among card issuers.
Industry experts say this could lead to lower prices for consumers as merchants pass on savings. However, it might also mean slimmer rewards for cardholders, such as fewer points or cash back on purchases. The deal comes after years of legal battles between merchants and the card giants, marking a step toward fairer practices in digital payments.
This agreement highlights ongoing efforts to balance the needs of businesses, consumers, and financial companies in a growing cashless economy. As e-commerce and contactless payments rise, such changes could reshape how we shop and spend.
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