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Visa and Mastercard have agreed to cap the so-called swipe fees they charge to merchants that accept their credit cards, as part of a class-action settlement that could save merchants an estimated $30 billion over five years — the latest development in a nearly 20-year legal battle.

Each time a customer uses one of its credit cards, Visa or Mastercard collects a swipe fee — also called an interchange fee — for processing the transaction, which it shares with banks issuing the cards. The merchants pass those fees along to customers, a practice that effectively inflates prices (and may motivate discounts given to customers paying with cash).

The settlement, which was announced on Tuesday and is subject to court approval, can be traced back to a 2005 lawsuit by merchants arguing that they paid excessive fees to accept Visa and Mastercard credit cards.

As more consumer spending has shifted to credit cards over the years, processing fees have also risen. To accept Visa and Mastercard, U.S. merchants paid $101 billion in total fees in 2023, including $72 billion in interchange fees, according to the Nilson Report, which tracks the payments industry. The fees also generate profits for big banks that issue the cards, and indirectly pay for credit card rewards programs, which aren’t expected to be affected by the settlement deal.

In addition to putting a ceiling on the swipe fees — an average of 2.26 percent of the transaction, according to Nilson — Visa and Mastercard agreed to roll back the posted swipe fee of every merchant by at least 0.04 percentage points for at least three years. For five years, the companies will not raise the fees above the posted rates at the end of last year. Systemwide, the average fee must be at least 0.07 percentage points below the current average rate, a calculation that an independent auditor will verify.

Merchants will also be permitted to adjust their prices based on the costs associated with accepting different cards, while letting customers know why some cards — typically business cards and those with more rewards and perks — cost more than others.

“This settlement achieves our goal of eliminating anticompetitive restraints and providing immediate and meaningful savings to all U.S. merchants, small and large,” Robert Eisler, co-lead counsel for the plaintiffs, said in a statement.

But not all merchants, particularly smaller ones, are as optimistic about the proposed changes. Temporary fee reductions fall short of what’s needed and underscore why Congress needs to pass legislation to promote a more competitive marketplace, said the Merchants Payments Coalition, a trade group representing retailers, supermarkets, convenience stores, gas stations and online merchants.

“The settlement does nothing to actually bring competitive market forces to swipe fees or change the behavior of a cartel that centrally fixes rates and bars competition,” said Christopher Jones, a member of the coalition’s executive committee and senior vice president of government relations at the National Grocers Association. “Instead, it tries to provide token, temporary relief and then allows the card companies to raise rates yet again.”

Senator Richard J. Durbin, a Democrat from Illinois who has long fought to keep interchange fees in check, introduced bipartisan legislation in June that would require big banks issuing credit cards to enable the cards to be processed on at least one other network besides Visa or Mastercard, in an effort to create more options for merchants beyond the two industry heavyweights.

Doug Kantor, general counsel at the National Association of Convenience Stores, said the settlement provisions that would allow merchants to charge more for credit cards that carried higher fees will be complicated to carry out and pitted the merchants against their customers.

“Even if they do use them, it makes the merchants the tax collector for the charges — and it makes merchants the bad guy in the eyes of the consumer, when it’s really the credit card companies that are squeezing everyone when it comes to big fees,” Mr. Kantor added.

Neither Visa nor Mastercard admitted to any wrongdoing.

In a statement, Mastercard’s chief legal officer and general counsel, Rob Beard, said the agreement “brings closure to a longstanding dispute by delivering substantial certainty and value to business owners, including flexibility in how they manage acceptance of card programs.”

Separately, Kim Lawrence, Visa’s president, North America, said the company had “reached a settlement with meaningful concessions that address true pain points small businesses have identified.”

Ron Shevlin, chief research officer at Cornerstone Advisors, a bank consultancy, said the most meaningful part of the deal might be the ability of smaller merchants to band together to negotiate fees as large groups.

“This is where the door has opened,” he added, “to something they haven’t had the power to do.”

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