Merchants Escalate Their Fight Over Card Swipe Fees

Nearly two decades into the same antitrust fight, merchants are telling a federal judge that Visa and Mastercard’s latest peace offering on swipe fees is not peace at all, and the fight over how card networks set prices for the country’s entire payments system is nowhere close to over.

A settlement merchants say fixes nothing

The Merchants Payments Coalition, an alliance of trade associations and retailers, has filed an objection asking the U.S. District Court for the Eastern District of New York to reject a proposed $38 billion settlement of the long-running interchange class action, arguing the deal was negotiated without meaningful retail input and leaves the mechanism that sets swipe fees untouched. Jennifer Hatcher, an MPC Executive Committee member and Chief Public Policy Officer at FMI, put it plainly: “the courts have emphatically rejected these settlements twice but now the card industry is trying again to get legal protection while offering little in return to merchants.”

The scale of the objection is itself a data point. Nearly 1,000 businesses and trade associations signed the filing, spanning small, medium and large retailers, restaurants, supermarkets, convenience stores and gas stations across all 50 states, the District of Columbia and Puerto Rico. A coalition that broad rarely agrees on legal strategy, which suggests the complaint is less about any single merchant’s fee bill and more about a structural objection to how the settlement was negotiated in the first place, without the retail side at the table.

What the deal actually changes

The proposal would cut posted credit interchange rates by roughly a tenth of a percentage point for five years and cap the standard consumer card rate at 1.25% for eight years. The coalition’s objection calls that reduction cosmetic against an average effective rate near 2.35%, roughly equal to the increase card networks imposed in the prior year alone. Two structural complaints matter more than the headline number. First, Visa and Mastercard remain free to raise their own network fees without limit, which merchants say could absorb any savings from the capped interchange rate before it reaches a retailer’s ledger. Second, the settlement’s revised honor all cards categorization still requires merchants who accept one card in a tier to accept every card in it, preserving the forced acceptance rule merchants have targeted since the case began.

A court that has already said no twice

This is the same 2005 class action that a Second Circuit panel sent back once and that U.S. District Judge Margo Brodie rejected outright in 2024. The court gave the current version preliminary approval in June, with payments originally expected to begin this month. A final ruling is not expected before late 2026 or early 2027, and large merchants pursuing their own appeal could push real implementation into 2029. The coalition is using its filing to push Congress toward the Credit Card Competition Act, which would force networks to route transactions over a competing rail instead of relying on litigation to cap prices after the fact.

What it means for the finance leader

For a CFO or payments lead at a merchant business, the practical read is: do not build 2026 or 2027 budgets around a swipe fee reduction landing on schedule. The settlement’s own history says extended litigation is more likely than a clean payout, and even a ratified deal phases its relief in over years while leaving networks room to raise other fees to offset it. Finance teams that have been waiting on interchange relief to fund a pricing change or a rewards program adjustment should treat that saving as speculative, not budgeted. The more durable lever available now is the one it has been for years: negotiating processor markup and routing choices directly, since that is the part of the cost stack a merchant actually controls while the network-level rate stays contested in court.

Why this keeps recurring

The deeper pattern is that Visa and Mastercard’s default swipe fee setting has survived two decades of litigation intact because settlements keep buying temporary rate caps instead of touching the mechanism, a point underscored by how aggressively the networks have been monetizing adjacent data and settlement services even as their base interchange economics stay under legal pressure. Visa has been turning its settlement data into a working capital product for large merchants and banks, and it has separately published research on where consumer trust in agent-initiated payments currently stands, which suggests the network is positioning for the next fee fight, over agentic commerce transactions, well before this one resolves. The pattern holds across both networks: as core interchange economics stay pinned down in court, the growth story both companies tell investors has shifted toward value-added services, data products and now agent-initiated commerce, categories a swipe fee settlement does not touch at all. A merchant that wins a modest rate concession in this case should expect the networks to keep growing revenue everywhere else the settlement does not reach.

What to watch next

The court has not set a firm date for a final approval hearing. The two markers worth tracking are whether Judge Brodie schedules that hearing before year end, which would signal she is inclined to move past the objections, and whether Congress attaches Credit Card Competition Act language to any must-pass legislation before the settlement clears, since that would reopen the structural question the coalition says the settlement dodges. Either way, merchants and card networks are negotiating the same fee dispute on two tracks at once, in court and in Congress, and neither is close to a resolution finance teams can plan around.

Source: Merchants Payments Coalition