Mastercard, Visa, and U.S. merchants have reportedly reached a settlement in the class-action lawsuit on credit card interchange fees that has been ongoing for two decades, with the original suit having been filed in 2005. In the original suit, merchants argued that credit card companies charge too much for vendors to accept their cards as payment, but at the same time, by denying specific card types— especially rewards cards—merchants are at a high risk of losing business.

The group has tried but failed to settle previously, with the last attempt in June of this year, where the agreed-upon terms were ultimately rejected by the court, who felt the settlement was insufficient. Notably, this current settlement was reached in an effort to prevent any government intervention on the issue and any subsequent mandates that would come from said intervention, which all parties agreed would be less than ideal.

The terms of the new settlement are still being examined, and the precise impact on credit unions is still unknown, but with the fee capped at 1.25% and vendors able to reject specific payment categories, it’s likely that credit unions will see a hit to their interchange fee income and credit card revenue. America’s Credit Unions, which has yet to release a statement on the issue, has previously spoken out against former settlements and the impact they may have on credit unions.

However, ACU has still released a short report on the settlement, noting that it specifically:

• “Gives merchants more options to surcharge, including if they do not surcharge other credit networks;
• Allows merchants to choose whether to accept U.S. credit cards in the three distinct categories—commercial, premium consumer, and standard consumer;
• Provides for a reduction of the U.S. combined average effective credit interchange rate by 10 bps for five years;
• Will cap posted U.S. credit interchange rates for five years, and cap standard U.S. consumer credit rates at 125 bps through the term of the agreement; and
• Make available a new merchant education program about payment acceptance and cost management.”

As the full settlement is studied and implemented, more news about its impact on the credit union industry will come.