Merchants Ask Judge to Reject Visa, Mastercard Fee Deal

Merchants representing a wide range of retailers filed court papers this week asking a federal judge to reject a proposed settlement that would resolve long-running litigation over interchange, or “swipe,” fees charged on card transactions. The filings say the agreement does not adequately compensate merchants, leaves anticompetitive rules in place and improperly limits future legal challenges.

Trade associations and merchant groups argued in court documents that the settlement’s cash payment and proposed changes to Visa and Mastercard’s network rules fall short of addressing the harms merchants allege. They contend the payment pool would be allocated in a way that benefits some merchants while many small businesses would receive little or nothing. The groups also wrote that the proposed injunctions would leave in place core contractual and technical features that affect transaction routing and fees.

Attorneys for the merchants pointed to evidence developed during the litigation that, they contend, shows the two card networks coordinated on fee levels and imposed rules that limit competition among banks and processors. The filings say the settlement would allow the companies to keep practices that determine how transactions are routed and how much merchants pay to accept cards.

The merchant lawyers raised concerns about how the settlement calculates payouts and the schedule for distributing funds. They said the agreement relies on disputed assumptions about past losses and future behavior, and that the notice and claims process would be difficult for many independent retailers to use. The filings questioned whether the injunctive relief would produce meaningful operational changes for the networks.

Visa and Mastercard defended the settlement in court filings, writing that it provides substantial cash payments and rule changes that will deliver benefits quickly to merchants and reduce ongoing litigation risks. The companies argued the compromise is the most practical way to resolve complex claims spanning many years and millions of transactions and that continued litigation would create uncertainty for merchants and cardholders.

The litigation centers on allegations that card networks and banks set interchange-fee levels and used network rules that steered transactions in ways that limited competition and raised costs for retailers. Interchange fees are paid by merchants’ banks to cardholders’ banks each time a consumer uses a credit or debit card; merchants typically pass those costs to consumers through higher prices.

Previous rulings and settlements in related cases have produced a mix of payments and rule changes. The merchants seeking to block the current deal say those earlier outcomes did not eliminate practices they view as harmful and that a full judicial determination of liability would better protect their interests.

If the judge rejects the settlement, the case could proceed to trial or spur new negotiations for a different agreement. If the judge approves the settlement despite objections, the objecting merchants could seek to appeal. The court’s decision will affect how card networks set fees and design rules and could influence tens of thousands of retailers that rely on card acceptance.