For years, the cost of accepting credit cards—often referred to as “swipe fees” or interchange fees—has been a top concern for U.S. merchants. After decades of legal battles, a new, revised settlement has been reached between Visa, Mastercard, and U.S. merchants.
At Beacon Payments, we believe in empowering our partners with clear, transparent information. This landmark settlement is complex, and while it's still subject to final court approval, we want to break down the key changes and how they might impact your business operations and bottom line.
The Core of the Proposed Settlement: Two Key Pillars
The new proposed settlement aims to resolve the long-standing class-action lawsuit over interchange fees and card network rules. While not all merchants are fully satisfied, the agreement does introduce changes intended to provide immediate financial relief and more flexibility at the point of sale.
1. Temporary Interchange Fee Reductions
The most immediate financial impact for many merchants is the planned reduction in credit card interchange rates.
- Average Rate Reduction: Visa and Mastercard have agreed to lower the average effective credit interchange rate by at least 10 basis points (0.10%) for a period of five years.
- Rate Cap: The agreement also caps standard consumer credit interchange rates at 1.25% for eight years.
- Cost Certainty: These reductions and caps are designed to provide a degree of certainty about your processing costs for the next five years.
What this means for you: This temporary rate reduction could lead to lower overall processing costs, allowing you to retain a slightly larger percentage of each sale. While the reduction is modest, these savings can add up, especially for high-volume merchants.
2. Greater Flexibility in Card Acceptance
Beyond the fee reductions, the settlement aims to give merchants more control over which cards they accept and how they manage costs at checkout.
| Change in Rule | Merchant Impact |
|---|---|
| Honor All Cards Rule Modification | Merchants will have the right to choose whether to accept certain categories of U.S.-issued credit cards (e.g., standard consumer, premium rewards, or commercial cards). |
| Steering and Surcharge Clarity | Merchants will gain clearer rights to steer customers toward lower-cost payment methods (like debit or a standard non-rewards card) and more options for surcharging (where state laws allow). |
| Lower Surcharge Cap | The settlement includes a provision to cap surcharges on Visa/Mastercard transactions at a uniform 3%, regardless of the network, which aims to simplify the process. |
What this means for you: This flexibility is the most significant long-term change. You may be able to adjust your acceptance policies to better manage the cost differences between a standard card and a premium rewards card, which typically carry the highest interchange fees.
A Word of Caution: What Merchants Need to Know
While the settlement promises relief, it is essential to keep a few details in mind:
- It's Not Final Yet: The settlement requires final approval from the U.S. District Court for the Eastern District of New York. Changes will not take effect until after this approval, which may take until late 2026 or early 2027.
- Temporary Relief: The most substantial fee reductions are only guaranteed for five years. After that period, without further regulation or court action, card networks could potentially raise rates again.
- Rewards Cards Remain King: The ability to opt out of certain card categories is new, but rewards cards still make up a significant portion of all transactions. You will need to weigh the potential cost savings against the risk of losing a sale if you decline a customer's preferred high-cost card.
Beacon Payments: Your Partner in Navigating Change
The payments industry is always evolving. Our goal at Beacon Payments is not just to process your transactions, but to ensure you are positioned for maximum profitability and clarity, regardless of industry changes.
As your trusted partner, we commit to:
- Transparency: Clearly communicating how these fee changes will appear on your monthly statement.
- Consultation: Helping you understand your new options for steering and surcharging to determine the best strategy for your business.
- Proactive Optimization: Continuously working to ensure you are on the most cost-effective processing program possible.
Don't wait for the settlement to finalize to get a handle on your costs. Now is the perfect time to review your current fee structure and acceptance strategy. Contact us to learn more about how we can help you find savings today.