ISLAMABAD – A major shake-up in the payments industry is expected as Visa and Mastercard are reportedly on the verge of a historic agreement with merchants, and this agreement could completely transform card fees, rewards, and the way payments work.
Under this deal, interchange fees, the charges banks pay to card networks, which currently stands between 2-2.5percent, and it would be slashed by nearly 0.1 percentage points over the next few years. The networks are also expected to relax the long-standing rule that all cards must be treated equally, giving merchants the unprecedented power to reject higher-fee cards.
If finalized, this deal would bring a 20-year legal battle over card acceptance rules to a close. Its ripple effects would be felt across the industry, impacting everything from merchant profit margins to consumer rewards programs that millions rely on.
Lower interchange fees could provide much-needed relief for merchants struggling with costs, but there’s flip side. Credit card rewards, which are a cornerstone for banks and consumers alike, could be weakened.
In 2024, banks collected staggering $72 billion in interchange fees, funding loyalty programs and perks that keep consumers hooked. These fees have long been a double-edged sword, supporting loyalty economy while fueling tension between merchants, banks, and card networks.
The new agreement could redefine that balance of power, reshaping the relationships and profits across the entire payments ecosystem. This is more than just a business deal—it’s a seismic shift that could alter the way we pay, reward, and shop for years to come.
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