US Merchants mount fresh challenge to Visa-Mastercard swipe fee settlement

Nearly 1,000 US merchants have urged a federal judge to reject the latest proposed settlement in the long-running battle over Visa and Mastercard interchange fees, arguing that the agreement offers temporary concessions while preserving the structure they blame for high card acceptance costs.

US Merchants mount fresh challenge

A filing backed by 978 merchants and trade groups describes the settlement as “riddled with loopholes” and calls on US District Judge Brian Cogan to deny final approval. Signatories span retailers, supermarkets, restaurants, convenience stores and other businesses.

The intervention adds another chapter to litigation stretching back to 2005 over allegations that Visa and Mastercard’s interchange arrangements and acceptance rules violate US antitrust law.

Merchants Say Fee Cuts Do Not Go Far Enough

Under the proposed settlement, the combined average effective interchange rate for US credit cards would fall by 10 basis points for five years. Standard consumer credit interchange would also be capped at 1.25 per cent, while posted credit interchange rates would be capped during the agreement.

Merchants would gain greater flexibility to surcharge credit cards and, importantly, could choose whether to accept separate categories of Visa and Mastercard credit products — standard consumer, premium consumer and commercial cards.

Visa argues these provisions provide merchants with meaningful financial relief and greater control over card acceptance.

Opponents disagree. Merchant groups argue that reducing interchange by one-tenth of a percentage point effectively returns average rates only to recent historical levels, while leaving Visa and Mastercard’s underlying role in establishing interchange rates intact.

A 20-Year Battle Over Card Economics

The dispute has repeatedly frustrated attempts at resolution.

An earlier settlement was overturned on appeal in 2016. Another agreement was rejected in 2024 after the court concluded that it failed to deliver sufficient relief, including over the networks’ “honour all cards” rules.

The revised agreement received preliminary approval in June, with Cogan determining that it was sufficiently reasonable to proceed towards a final hearing. Merchants were given until 14 September to lodge objections, with the fairness hearing scheduled for 16 November.

The Merchant Payments Coalition argues the latest proposal remains inadequate, claiming that card fees have risen sharply since the pandemic and represent one of retailers’ largest operating expenses after labour. Visa and Mastercard dispute the characterisation of their arrangements as anti-competitive.

The Wider Fight Over US Card Competition

The court battle comes as interchange economics face renewed political scrutiny in Washington.

Merchant groups continue to support the Credit Card Competition Act, which would require large issuing banks to enable transactions over at least two unaffiliated networks, potentially introducing greater routing competition into US credit cards.

That makes the settlement about considerably more than a 10-basis-point reduction.

At stake is whether merchant choice should be expanded within the existing Visa-Mastercard model or whether the US credit card market requires more fundamental structural competition.

After more than two decades of litigation, merchants are making clear that they believe the latest compromise still falls short.