The Visa & Mastercard swipe fee settlement is one of the most significant developments in the payments industry in decades. The proposed agreement addresses interchange fees, credit card processing fees, surcharging rights, and the long-debated Honor All Cards rule, all of which directly affect merchants’ payment acceptance costs.

On June 9, US District Judge Brian Cogan granted preliminary approval to the revised settlement between Visa, Mastercard and more than 12 million US merchants. The case has been going on for over 20 years and is grounded in the network’s concentration of pricing power over fees, and their anti-competitiveness. According to the Merchants Payments Coalition, Visa and Mastercard swipe fees in the US reached $118.8 billion in 2025, up 6.8% vs 2024 ¹.

In this article, we summarize what the proposed deal contains, the consequences for the merchant community, and what steps payments decision makers or merchant treasury teams should take.

¹ Source: Reuters, Visa, Mastercard $38 billion swipe fee settlement wins US judge’s approval (June 10, 2026).

What Does the Visa & Mastercard Swipe Fee Settlement Include?

The settlement rests on four propositions. It is important to highlight that final approval of the deal is required for these propositions to be cemented and applicable.

Lower interchange fees. The US combined average effective credit interchange rate would fall by 10 basis points for five years, measured against current levels. The reduction would apply pro rata to merchants on negotiated rates, not only to those paying published interchange. For many merchants, lower interchange fees could reduce overall credit card processing fees, although the impact will depend on card mix and acquiring arrangements.

Redbridge comments: The 10bps interchange reduction only represents a 4% drop from the average credit card processing fee, which the Merchants Payments Coalition reports was approximately 2.36% in 2025. Receiving this reduction will depend on your acquirer pricing model, so merchants need to be proactive and get to the negotiation table with their acquirer to ensure the savings are effectively passed onto them.

Freeze & Cap. Published US credit interchange rates would freeze for five years. Visa Traditional, Visa Traditional Rewards, Mastercard Core and Mastercard Enhanced Value, would be capped at 1.25% for eight years. Unlike the freeze, this could provide a material cost decrease for merchants whose cards mix skews toward premium products.

WATCH OUT: As proposed, the settlement’s implementation and its impact on interchange could mechanically push merchant’s cost of acceptance even higher, as the networks could try to fill the gap left by lower interchange with higher assessment fees.

Redbridge comments: Understanding your card mix is critical and will determine which proposition could have the bigger impact on your costs. There is no confirmation for now whether the 1.25% cap counts towards delivering the 10bps average reduction in interchange, only the final agreement will tell. In response, we could see issuers pushing cardholders towards uncapped products and reduce merchants’ volume of capped products over the cap period. Again, understanding and tracking your payments mix is vital to implementing the right strategy. To conclude, the industry’s disappointment in this proposition lies in the fact that it doesn’t address network fees, and the overall underlying system and mechanism enabling Visa and Mastercard to continuously increase those fees. The 10bps interchange reduction and cap/freeze are only a band aid on a wider systemic issue.

Surcharging freedom and end of “Honor All Cards”. Merchants could gain the right to surcharge Visa and Mastercard credit transactions up to 3 percent, at either the brand level or the product level. While surcharging is already permitted in many jurisdictions today, the proposed settlement could expand flexibility around how merchants apply those surcharges. The agreement wouldn’t override state laws, so its possible application would need to be thoroughly assessed for each merchant based on their card acceptance channels and locations.

Redbridge comments: surcharging implementation remains incredibly complex and could dampen or even damage client relationships for some merchants. The revenue risk vs. cost benefit needs to be carefully analyzed to balance Customer Acquisition Costs, Customer Experience, and Customer Lifetime Value. The same applies to the end of “Honor All Cards” rule. Depending on your card mix and customer preferences, rejecting premium and/or commercial cards could turn customers away and translate into a revenue risk.

What Should Merchants Do Now?

With final approval expected to trigger rapid repositioning across acquirers, networks, and issuers, merchants who act early will be best placed to capture the benefit.

1. Understand your own data – Merchants can’t grasp the potential impact of the settlement without knowing their volume split across standard consumer, premium consumer and commercial cards, and the effective rate on each.
2. Model the category decisions – What does declining commercial cards do to your cost base, and what revenue would genuinely be at risk? The answer will vary greatly from one merchant to another.
3. Design a surcharge strategy, do not just switch one on – Many factors, including brand level or product level, which states, what disclosure, what customer impact, and how it interacts with your competitors’ choices need to be taken into account.
4. Watch the offsets – Track your total cost of acceptance and overall payment processing costs, not the interchange line alone. If network fees and acquirer margins increase as interchange comes down, the settlement benefits would be eroded.
5. Get to the negotiating table early. If applied, the settlement would push the wider supply chain to recalibrate their strategy around the deal. Make sure to come to the negotiation table early so you’re not locked in your vendors’ new pricing structures.

Understanding the potential impact of the settlement requires more than reviewing published interchange rates. Merchants need visibility into card mix, acceptance costs, network fees, acquirer pricing structures, and customer payment behavior. Redbridge helps merchants analyze these variables, quantify the potential impact of industry changes, and develop data-driven payments strategies that protect margins while supporting growth.