Payments and Processing: Thoughts on MA/V Preliminary Approval in Merchant Settlement

Research evidence excerpt

Payments and Processing: Thoughts on MA/V Preliminary Approval in Merchant Settlement

Update

June 11, 2026 04:01 AM GMT

Morgan Stanley & Co. LLCMPayments and Processing | North America James E Faucette

Equity Analyst

Thoughts on MA/V Preliminary James.Faucette@morganstanley.comMeryl R Thomas, CFA +1 212 296-5771

Research Associate

Meryl.Thomas@morganstanley.com +1 212 761-0774

Approval in Merchant Michael N Infante

Michael.Infante@morganstanley.com +1 212 761-4631

Settlement Shefali Tamaskar

Shefali.Tamaskar@morganstanley.com +1 212 761-4948

The preliminary approval for MA/V's merchant settlement is a

positive development, and we expect that if it receives final

approval, direct impact to the networks' would be well

contained. We'd watch for any incremental friction at checkout,

but don't expect share shift away from cards. Payments and Processing

North America

What happened: A federal judge granted preliminary approval to a settlement Industry View Attractive

between Mastercard/Visa and merchants on interchange fees. The litigation, which

consolidated multiple merchants’ claims against Mastercard and Visa into one

federal court proceeding in New York dates back to June 2005. The terms of the

settlement include:

• A 10 basis point reduction in average credit card interchange rates for five

years

• A cap on Standard consumer credit card interchange rates at 1.25% for eight

• Merchants gaining the right to decline certain higher-cost premium and

commercial credit cards, departing from the "Honor All Cards" rule

• Increased flexibility for merchants to impose surcharges on credit card users

Should be limited direct impact to MA/V. As we wrote previously, we expect that

banks would largely absorb the expected ~10 bp average reduction to interchange