WASHINGTON — The Merchant Payments Coalition expressed disappointment with a federal judge’s preliminary approval of a proposed settlement of merchants’ lawsuit over Visa and Mastercard credit card swipe fees, saying the settlement still fails to provide adequate relief.
“The vast majority of merchants oppose this proposed settlement,” MPC Executive Committee member and National Association of Convenience Stores General Counsel Doug Kantor said. “We expect many more objections to be filed that will present the court with clear evidence of the profound problems with this settlement that would make the already broken credit card market even worse. We are hopeful that the judge will refuse to grant final approval, and that merchants will have their day in court.”
U.S. District Judge Brian Cogan on Tuesday gave preliminary approval to the proposal.
The proposed settlement comes in a 2005 class-action lawsuit alleging that Visa and Mastercard, which control 80% of the market, violate federal antitrust law by centrally price-fixing swipe fees charged by all banks that issue cards under their brands and organizing those banks into a cartel structure.
An earlier settlement was overturned by the 2nd U.S. Circuit Court of Appeals in 2016 after merchants said it would do nothing to change the cartel-like pricing practice. In 2024, a proposed settlement similar to the current proposal was rejected by Judge Margo Brodie, who said it did not adequately address the price-setting structure and expressed concern that Visa and Mastercard’s “honor all cards” rule makes merchants accept all cards from all banks regardless of swipe fee rates charged and the banks’ refusal to compete on the fees.
The current proposal, released in November 2025, is the third proposed settlement of the litigation but still does nothing to address Visa and Mastercard’s price-fixing. Instead, it would lower swipe fees by a meager 10 basis points, or one-tenth of a percentage point, for just five years while blocking all lawsuits for eight years — or, in some readings of the settlement, indefinitely.
Kantor said the proposed reduction is a mirage because it would be a only a fraction of the average 2.36% swipe fee charged to merchants to process transactions in 2025 and is barely more than the one-year 9 bps increase from 2023 to 2024. In addition, it would apply only to card-issuing banks’ portion of swipe fees, while doing nothing to limit the portion that goes to Visa and Mastercard, which could wipe out the reductions entirely.
In another provision, Visa and Mastercard would modify the honor all cards rule, which forces merchants who accept regular cards with the average rate or less to also accept rewards and commercial cards with swipe fees as high as 4% or more. Under the provision, Visa and Mastercard would classify cards as “standard,” “rewards” or “commercial” and let merchants choose which categories to accept — while still requiring that cards from every bank and all cards within a category be honored. That modification is unworkable because it includes loopholes allowing banks to simply make all of their cards into rewards cards, according to Kantor.
Credit and debit card swipe fees have increased 80% since the pandemic, reaching a record $198.25 billion last year. They are most merchants’ highest operating cost after labor and are too much to absorb, driving up prices by more than $1,200 a year for the average family.
In addition to setting swipe fee rates, Visa and Mastercard block transactions from being processed over other networks that could do the job with lower fees and better security.
The preliminary approval comes as Congress is considering the Credit Card Competition Act. Under the CCCA, banks with at least $100 billion in assets would enable cards they issue to be processed over at least two unaffiliated networks — Visa or Mastercard plus a competitor like NYCE, Star or Shazam. The measure is expected to result in competition over fees, security and service that would save merchants and consumers $17 billion a year.
