Visa, Mastercard agree to $30B deal with merchants: Impact on Credit Card Holders

Visa and Mastercard, while denying any wrongdoing, have agreed to several changes as part of a $30 billion settlement with merchants. These changes include:

  • Lowering interchange rates (swipe rates) by at least 4 basis points for three years.
  • Ensuring that swipe rates remain at least 7 basis points below the current average for the subsequent five years.
  • Allowing merchants to steer customers towards alternative payment methods more easily and to impose surcharges on premium credit cards with higher swipe fees.

It’s important to note that the settlement is still subject to court approval, and any alterations won’t take effect until late 2024 or 2025, according to a statement from Mastercard.

Implications for Credit Card Holders

Patrick Payne, an associate professor at the University of Arizona, anticipates minimal immediate changes from the settlement but suggests that it could lead to increased costs for premium credit cards.

Already costly, premium cards like the Chase Sapphire Reserve and the Platinum Card from American Express could become even more expensive. Merchants incur higher fees for processing transactions with these cards, with swipe fees averaging about 2% per transaction and potentially reaching 4% for premium rewards cards.

Should the settlement be approved, merchants would gain the ability to charge customers more for using premium Visa and Mastercard credit cards. However, Lulu Wang, an assistant professor at the Kellogg School of Management, suggests that implementing such surcharges may strain merchant-customer relationships and negatively impact business.

Will Consumers Benefit?

While retailers are expected to save billions in the aftermath of the settlement, there’s uncertainty about whether these savings will trickle down to consumers. Some experts believe that smaller businesses might offer more competitive prices to attract customers away from larger retailers. However, others are skeptical, questioning whether merchants will pass these savings on to customers, particularly given the limited awareness of the settlement among consumers.

Future Actions of Visa and Mastercard

Despite the settlement, Beverly Harzog, author of “The Debt Escape Plan,” doesn’t anticipate significant changes among credit card issuers due to the temporary nature of the alterations. Visa plans to uphold its rewards and credit access offerings if the settlement is finalized. However, it remains to be seen how Visa, Mastercard, and other credit card companies will respond to the settlement once it’s approved.


While the Visa and Mastercard settlement holds the promise of changes in interchange rates and merchant practices, its ultimate impact on credit card holders remains uncertain. Whether consumers will benefit from potential savings or face increased costs associated with premium credit cards depends on various factors, including merchant decisions and the actions of credit card issuers post-settlement approval.

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