The Public Ledger: Merchant Settlement Advances

Hello, Fintech Friends!

After rejecting past settlement attempts as insufficient, last week, a circuit judge from Brooklyn preliminarily approved a revised agreement between the networks and a class of more than 12 million merchants, signaling the potential end to a more than two decades-long litigation. The preliminary approval will be subject to a comment period before a final okay is granted. Factions of the merchant class have pledged to appeal the agreement if approved.

The revised settlement, which was struck last November, agrees to lower the average credit card interchange rate by 10-bps over a five year period and cap the interchange rate for standard credit cards at 125-bps over an eight year period, a 62-bps decline from the current standard rate, and a full 100-bps lower than the current rate for premium cards. Additionally, certain large merchants that have individually negotiated agreements with issuers will enjoy a similar reduction to the interchange rates they pay. The settlement also allows merchants to reject certain cards, surcharge, and discount.

While some analysts believe it could take a couple more years before the new agreement is finally implemented, it is never too early to consider the ramifications for the industry.

To state the obvious, merchants will enjoy a measure of economic relief while issuers see diminished interchange revenue. Of course, the changes are only temporary, and, by all indications, networks and issuers are free to revert back to the old, higher rates once the prescribed periods expire.

Beyond that, the impacts are more nuanced. Some people have speculated the settlement will ease pressure for a legislative fix, potentially halting momentum for the Credit Card Competition Act. While anything is possible, from my perspective, there are only three certainties in life: death, taxes and merchants, especially the largest ones, fighting for lower interchange rates. So, I see that battle continuing.

If history is any indication, a reduction in interchange rates could serve as a temporary tailwind for acquirers and payment service providers, or PSPs, especially those that serve small businesses and price on a gross basis and treat interchange as a cost of revenue. The thinking goes that acquirers and PSPs will lower their rates to customers by a smaller amount than the reduction in interchange rates, creating a net benefit for them, at least over the short-term.

Finally, some of the more interesting opportunities to consider are around rejection, surcharging, and discounting. Right now, there are cards in the market that allow a consumer to toggle between debit and credit. Under this framework, is it possible we see a card that changes between standard and premium credit programs with differing reward structures? Certainly, I believe there are opportunities for sophisticated acquirers to help merchants lower their cost of acceptance by dynamically identifying a cardholder and tailoring an approach to induce them to transact in the most economically favorable way possible. As an example, an acquirer may know a certain cardholder is willing to transact with a standard credit card, as opposed to a premium one, if presented a modest discount, say 75-bps, netting a 25-bps benefit for the merchant after factoring in the lower interchange rate (100-bps) for a standard credit card.

Bob Hammel

p.s. Have feedback? Reach out on X

Last week, Adyen* announced their second acquisition in as many months. They are buying Orb, a usage-based pricing and billing platform for $335M, or approximately €290M. In a world of AI-based services, software companies are moving away from static subscriptions and toward dynamically-priced consumption-based solutions. In this regard, Adyen fills the need that existing and prospective customers were asking for, and closes a perceived gap with Stripe, who had made a deal themselves back in January to bulk up in this area. Combined with Talon.One, Adyen will spend slightly more than €1 billion on these two acquisitions. Both are expected to close on July 1 and add 1-point to 2026 net revenue growth, implying an initially modest net revenue contribution. In a video accompanying the acquisition announcement, Adyen stressed they remain committed to building their own technology where possible, and their acquisition approach remains highly selective.

* As of June 17, 2026, I am long Adyen.

Read more: Adyen to acquire Orb to unify billing and payments infrastructure for enterprise merchants

In a somewhat shocking development, on Monday, Fiserv announced that its CEO, Mike Lyons, would be leaving the company to assume the same role at Truist Financial, a super regional bank. Mr. Lyons officially succeeded Frank Bisignano—who left Fiserv to head up the Social Security Administration—in May of 2025. Under Lyons’ tenure, Fiserv dramatically reset its earnings base by abandoning aggressive monetization efforts and making deferred investments in systems resiliency and customer service, in part to address heightened attrition in its core banking franchise, highlighting these efforts at an investor day about one month ago. From its all-time high reached in February 2025, shares of Fiserv are down nearly 80%. Takis Georgakopoulos, recently the leader of Fiserv’s merchant business and former head of J.P. Morgan’s payments division, will assume the CEO role at Fiserv.

Read more: Fiserv Announces Leadership Transition

In an announcement that is becoming all too familiar across fintech, on Tuesday, Robinhood announced it will be reducing its headcount by about 10%, or 290 employees. As always, Robinhood insisted these cuts were being made from a position of strength to ‘maximize talent density’ and flatten its organizational structure. While the company did not specifically cite AI by name as the driving factor for the changes, they did mention they will be ‘utilizing frontier technologies to push our execution’ further. Robinhood joins Block* (40%), BILL Holdings (30%), PayPal (20%), Intuit* (17%), and Coinbase (15%) in making significant changes to its workforce in recent months.

* As of June 17, 2026, I am long Block and Intuit.                

Read more: Robinhood Statement on X