Merchants Reject Revised Visa and Mastercard Settlement
Merchant organizations are challenging an anticipated settlement proposal in their prolonged, twenty-year lawsuit against Visa Inc. and Mastercard Inc. over card-acceptance fees, claiming it fails to tackle the root cause behind raised transaction costs. Merchant resistance emerged over the weekend following a Wall Street Journal article on Saturday, which reported the card networks have devised a revised settlement offer.
The current proposal follows more than a year after the networks’ first offer to resolve the case was declined by Judge Margo Brodie in June 2024. According to reports, the new offer envisions Visa and Mastercard reducing swipe fees by 0.1 percentage points over several years. Merchants would reportedly gain the ability to select which card types they accept—such as rewards, premium, standard, or commercial cards—rather than being required to honor every card under the existing all-cards mandate. Additionally, merchants would reportedly obtain broader permission to apply surcharges on card transactions to help offset acceptance expenses.
The pushback from merchants centers on the networks’ inability to support a payments environment that allows genuine pricing competition for acceptance costs, according to merchant advocacy groups. The Merchants Payments Coalition, the National Association of Convenience Stores, and the National Retail Federation released statements on Sunday opposing the anticipated settlement and urging the court to reject the agreement.
Doug Kantor, an executive committee member of the Merchants Payments Coalition and general counsel for the National Association of Convenience Stores, explained that the core issue persists as the catalyst for the lawsuit. He highlighted a major shortcoming in the proposed settlement: the guidelines governing surcharges. Merchants may reportedly impose surcharges on transactions involving a specific card brand, but not on cards issued by particular financial institutions. Kantor stated that allowing merchants to determine which issuers are subject to surcharges would open avenues for direct negotiations between merchants and card issuers, supporting a more balanced competitive market. Without the ability to negotiate with issuers, merchants encounter “competitive friction, which is a dynamic the lawsuit was intended to address,” Kantor added.
The likelihood of an out-of-court resolution remains uncertain. Richard Hunt, executive chairman of the Electronic Payments Coalition, contends that if the offer is not approved, responsibility will rest with the merchants. Hunt argues that retailers and card companies reached a settlement agreement, and rejecting the proposal would mark the second time in under two years an offer has been turned down. He questions how retailers can oppose an offer without first reviewing it, suggesting “pure greed” drives the resistance from large retail chains. Hunt also noted that the EPC applauds both parties for seeking a settlement without proceeding to trial and hopes an agreement can be reached before Congress intervenes, which he believes would disadvantage both sides.
