FinTech: What Mastercard, Visa’s imminent deal with merchants means for consumers

*Following two decades of legal tussle, Mastercard and Visa move to close another settlement with merchants that will trim their fees a bit and, more importantly, give stores and consumers more flexibility to say no to certain higher-cost cards

Isola Moses | ConsumerConnect

Every time a consumer taps a Visa or Mastercard, the store is paying roughly 2–2.5 percent of the transaction to the card networks and the bank behind your card, says report.

After two decades of legal fighting, Visa and Mastercard are now close to another settlement with merchants that would trim those fees a bit and, more importantly, give stores more flexibility to say no to certain higher-cost cards.

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That’s the part consumers will actually feel, the Wall Street Journal reported recently.

What’s actually changing?

The Wall Street Journal recent report indicated details of the deal with merchants.

The following highlight the proposed deal with the two global technology giants:

1. Small fee reductions for stores. Visa and Mastercard would shave the fee built into card payments by about 0.1 percentage point.

Not all at once though, it would be spread out over time.

That’s real money for big retailers processing billions a year, but it’s not a dramatic cut, which is why merchant groups are already saying it still lets the card networks “keep fixing swipe fees.”

2. Stores could sort cards by cost. Right now, if a store takes Visa, it generally has to take all Visa credit, including the rewards cards that cost the most to accept.

The new structure being discussed would let stores treat cards on an individual level.

So, cards with heavy rewards, no-rewards, and commercial cards could be separated.

That opens the door for a store to prefer cheaper cards or even refuse the priciest ones.

Consumers who love high-rewards cards are the group most likely to bump into “sorry, we don’t take that one” at smaller or lower-margin businesses.

3. More room for surcharging or steering. The reporting also says surcharging is part of the talks.

Surcharging is when the store tells shoppers upfront that since you’re paying with a credit card, we’re adding a fee to your transaction.

That matters because merchants have complained for years that they were blocked from nudging shoppers toward cheaper payment methods.

If those rules get looser, you could see more signs at checkout that say “X% added for premium credit” or signs steering you towards cash or debit card discounts.

We’ve already seen this after earlier settlements and court rulings and this could normalise it further.

Why are Mastercard and Visa are doing this now?

This is basically the sequel to a long antitrust fight in federal court in New York over credit-card fees and rules.

Earlier efforts included a big settlement meant to save merchants around $30 billion over several years, but a judge rejected a version of that in 2024, which sent everyone back to the table.

Card networks keep denying wrongdoing, but settling gives them certainty and heads off more years of expensive litigation.

Implications for digital consumers

You might see more payment “friction”.

The United States (US) has been spoiled by near-universal card acceptance, report said.

If merchants get more power to reject high-fee cards, you could run into the occasional “we only take basic Visa/Mastercard or debit.”

This could end up forcing consumers to keep backup cards in their wallets.

Premium rewards could get pressure. Rich travel cards tend to carry higher fees because those rewards have to be paid for somehow.

If more merchants start pushing back on those cards, banks and networks may have to rethink how rich certain rewards offers can be in the future.

That won’t be immediate, but it’s the logical downstream effect.

Price effects will be subtle.

A 0.1-point cut is helpful for retailers, especially small ones, but it’s not the kind of drop that turns into a big, obvious price decrease for shoppers.

At best, it will be the slow drip of “we had to raise prices because costs went up.”

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