Visa and Mastercard are close to a new agreement that will attempt to resolve a two-decade-old legal dispute with retailers, according to a person with direct knowledge of the matter.
Credit card companies will make changes to reduce interchange fees by an average of 10 basis points over several years under the terms of the agreement, said the person, who asked not to be identified ahead of the official announcement. The deal will also relax rules that require merchants to accept all Visa or Mastercard cards if they accept any card in the network, the source said.
O Wall Street Journal previously released details about the possible deal. Spokespeople for Visa and Mastercard declined to comment.
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The deal would be the latest chapter in a long saga in which credit card companies have offered multiple deals over the past decade but have failed to end the dispute. Last year, a federal judge rejected a proposal that would have saved merchants about $30 billion in fees over five years, saying financial companies could give up more.
Retailers have struggled for decades to reduce their share of the cost of accepting card payments, also known as interchange fees. A large portion of these fees are passed on to the card issuing banks, including giants such as JPMorgan Chase and Citigroup.
The 10 basis point reduction would represent an increase over the 7 basis point savings anticipated in last year’s agreement. The potential deal would also allow merchants to apply a surcharge on Mastercard and Visa products, according to the source.
Interchange fees add up to more than $100 billion annually and are one of the main drivers behind the rewards offered to consumers on premium cards. Some retailers have been pushing for more power to not accept higher-value cards that carry a higher interchange fee, even if they allow the use of more basic Visa and Mastercard cards.
The legal dispute over credit card usage fees dates back to at least 2005 — before Visa and Mastercard were spun off from the banks that owned them to become publicly traded companies.
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