Visa and Mastercard reach agreement on merchant fee, end a 20-year-old litigation

Visa Inc. and Mastercard Inc. reached a deal with retailers to reduce some of their fees and give merchants more leeway to reject customers who use certain credit cards, including the premium ones that have been surging in popularity.

The proposed settlement — which is meant to bring more than 20 years of litigation to an end — could ultimately save merchants more than $200 billion, according to Joseph Stiglitz and Keith Leffler, who served as expert economists in the case on behalf of the retailers. That would make it one of the largest-ever class-action settlements of a US antitrust case.

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.

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