Merchant groups attacked a settlement to end decades of litigation over card networks’ interchange fees, alleging in court filings this week that the proposed pact still gives Visa and Mastercard far too much legal immunity and leeway to set fees.
Several of the objecting merchants said Friday that the settlement reached last month largely resembles a prior agreement a federal judge in Brooklyn, New York, rejected last year that many merchants also had opposed.
Merchants filing by a Friday night deadline included the National Restaurant Association, the National Association of Convenience Stores, Walmart and the luxury fashion retailer Hugo Boss Group. The litigation, which dates to 2005, is in the Eastern District of New York.
The merchants’ objections focused broadly on the temporary aspect of the settlement’s fee caps over its eight-year term. They also expressed dissatisfaction that the settlement does not require more fundamental changes in how the networks establish default swipe fees for most merchants, without negotiations.
It also offers Visa and Mastercard relief from future litigation over their fees, the National Association of Convenience Stores and Circle K said in their objection. The settlement “both perpetuates the interchange fee conspiracy and forbids nearly every merchant in the country from challenging it as an antitrust violation in future years,” they wrote. “That is antithetical to the intended operation of the antitrust law.”
The proposal would cut posted credit interchange rates by ten basis points for five years and impose a 1.25% rate for standard consumer cards for eight years. It would also give merchants the right to decline some higher-cost Visa and Mastercard-branded credit cards – a departure from the networks’ “honor all cards” rule – and the ability to add surcharges on some cards.
The settlement “is a gift to Defendants that lets them continue to restrain trade without fear of being challenged by large national merchants in exchange for narrow relief that only benefits a different subgroup within the class,” Walmart said in its filing, which accused plaintiffs’ lawyers of having “yet again sold out their fellow class members.”
Walmart also asked the court to decertify the class, allow large merchants to opt out, or redefine the class “to carve out large national merchants.”
U.S. merchants pay the world’s highest interchange fees – usually 2% to 4% on a transaction – because of a Visa-Mastercard duopoly that sets fees for issuers and controls most of the market, the National Restaurant Association and Restaurant Law Center said in their joint filing.
Fees on debit and credit card transactions totaled about $187 billion last year, including $111 billion on Visa and Mastercard-branded credit cards, the restaurant groups said.
The settlement’s “meager reduction” of 0.1% on interchange “would barely nullify the increase in swipe fees over the last year alone,” the restaurant groups said, citing data from the Nilson Report of an average interchange rate of 2.35% last year, up from 2.26% in 2023.
“This settlement is offensive to the class that is supposed to be benefiting from this litigation,” Jennifer Fern Steindler Darling, a Hugo Boss USA vice president and general counsel, wrote Tuesday in the company’s objection. “Please reject this settlement and any future settlement that does not address the underlying issues.”
The National Association of College Stores does not “want to be bound by a bad deal,” Richard Hershman, vice president of the Oberlin, Ohio-based organization, wrote Friday in a filing. “This proposed settlement sacrifices the legal rights of merchants like ours and our members in exchange for inadequate, temporary and unworkable relief, and it would further entrench the current swipe fee system.”
Richard Hunt, executive chairman of the Electronic Payments Coalition, said Friday that the proposed settlement “provides businesses of all sizes with meaningful and significant concessions that give more flexibility and choice in card acceptance,” along with more options to pass along processing costs and a cut on standard credit card fees.
“With this agreement, lobbyists for corporate mega-stores and a few politicians can end their misguided crusade – at both the federal and state levels – to undermine our safe, secure, and efficient payment systems through untested government mandates,” Hunt said in an emailed statement. Visa and Mastercard are EPC members.
A Visa spokesperson reiterated the company’s November statement that the settlement provides merchants “meaningful relief, more flexibility and options to control how they accept payments from their customers.”
A Mastercard spokesperson said in an emailed statement Monday that “the settlement directly addresses the court’s prior concerns and reflects months of negotiations overseen by an independent mediator and the court-approved plaintiffs’ counsel.”
U.S. District Judge Margo Brodie rejected a prior settlement 18 months ago after finding that it did not treat merchants in the class equitably in terms of their rights to impose surcharges. The case has since been assigned to U.S. District Judge Brian Cogan.
About 30 merchants across three other plaintiff groups have reached independent settlements, including retail giants Amazon, Costco Wholesale and Lowe’s.
Visa and Mastercard face two damages trials next year, pitting the networks against groups of merchants that had sued over the card swipe fees. The first is scheduled for April in New York City, with a second trial set for September in Chicago by a second group, led by delivery service GrubHub.
Merchants involved in the New York trial, which includes 7-Eleven, Dick’s Sporting Goods and Nike, asked Cogan Friday to confirm that some provisions of the settlement won’t affect their 2026 trial.
