The proposed Visa–Mastercard interchange settlement that was rejected by the court in mid-2024 has, over the course of 2025, been renegotiated and resubmitted in a form that several merchant trade groups now describe — with measured language — as "materially better, though still not what merchants wanted." With the latest draft moving through the approval process in the final quarter of the year, it is worth translating what is actually in front of the court into what it would mean for an average merchant's effective interchange.

What changed from the rejected version

The 2024 version of the settlement was rejected primarily on the basis that the cap reductions were too modest and the duration too short to deliver meaningful relief. The 2025 renegotiated version addresses both criticisms partially, though not to the extent merchant groups had pushed for.

The headline cap reduction is larger than in the rejected version, and the duration over which the reduction is locked in is longer. The exact figures continue to be debated as the draft moves through approval, but the order of magnitude is a meaningful single-digit basis-point reduction sustained over multiple years, rather than the smaller and shorter reduction that drew the rejection.

The renegotiated version also expands the surcharging and steering rights that merchants gain. The previous version included surcharging language that several state attorneys general flagged as effectively unworkable given state-level surcharging laws. The new draft attempts to thread that needle more carefully, though as a payments consultant we spoke to put it, "the lawyers are going to be busy for years figuring out what this actually permits in California versus Texas versus New York."

What it means for a typical merchant

The effective interchange impact depends heavily on a merchant's card mix. The settlement's cap reductions apply most directly to certain credit card categories; debit interchange is governed by a separate regulatory regime and is not meaningfully affected.

For a merchant with a credit-heavy card mix — restaurants, travel, premium retail — the effective rate reduction over the locked-in period is meaningful, though it is unlikely to show up as a dramatic line item in any single quarter. A CFO at a mid-market specialty retailer told us they are modeling the impact at "noticeable but not transformative — call it a few basis points on credit volume, blended down across the full card mix."

For a merchant with a debit-heavy mix — grocery, mass, discount — the direct interchange impact is smaller, and the operative question becomes whether the expanded surcharging and steering rights are commercially usable.

The surcharging question

Surcharging is the part of the settlement that merchant groups view as potentially the more valuable provision over time, even though it is harder to model.

The expanded rights, if approved, would in principle allow merchants to surcharge or steer customers away from the highest-interchange card categories. In practice, the operators we spoke to are skeptical that surcharging will be widely deployed at point of sale. Customer reaction is the main concern. A director of payments at a national retail chain put it this way: "Even if we can surcharge premium credit, we won't, because the friction at checkout costs us more than the interchange savings."

What surcharging may meaningfully unlock is steering — offering small discounts for debit or ACH at checkout, encouraging account-to-account flows in app, and giving private-label or branded cards more competitive economics relative to network credit. The merchants most likely to capture value here are the ones with mature loyalty programs and direct customer relationships, where steering is a tweak rather than a confrontation.

Timeline and execution risk

The settlement is moving but is not approved. Several scenarios remain plausible:

  • The court approves the renegotiated version largely as drafted in early-to-mid 2026.
  • The court approves it with modifications, particularly around the surcharging language and the duration of the caps.
  • A second rejection sends the parties back to the table — a possibility several payment-law practitioners we spoke to consider less likely than in 2024 but not zero.

The merchant takeaway

For finance and payments teams planning 2026 budgets, the practical posture is to model the interchange reduction as a small tailwind in the back half of the year if approval lands on the current trajectory, and to invest the planning hours now in understanding which steering tactics would actually work in their specific channel mix.

The settlement is a meaningful win relative to a decade of status quo. It is not, as some early coverage framed the 2024 version, a structural reset of card economics. Merchants who treat it as the former will be appropriately positioned. Merchants who treat it as the latter will be disappointed when the line item lands.