Merchants oppose Visa Mastercard settlement offer

Merchant groups oppose a new proposed settlement in their long-running lawsuit against Visa Inc. and Mastercard Inc., saying the offer does not fix the core issue of high card-acceptance fees. The opposition emerged after a report that the card networks prepared a revised settlement proposal.

The latest offer comes more than a year after Judge Margo Brodie rejected the networks’ initial settlement offer in June 2024.

Details of the Proposed Settlement

The new deal reportedly includes a 0.1 percentage point reduction in swipe fees over several years. It would also let merchants accept or decline specific card types, such as rewards, premium, standard, and commercial cards. Additionally, merchants could get more freedom to add surcharges on card transactions to cover acceptance costs.

Despite these terms, merchant organizations argue the settlement fails to address the fundamental problem: a lack of pricing competition in the payments system.

“That’s the central problem, and the settlement does not address it,” says Doug Kantor, a Merchants Payments Coalition executive and general counsel for the National Association of Convenience Stores. “[The central problem] remains the reason why the lawsuit was brought in the first place.”

Merchant and Industry Reactions

The MPC, NACS, and the National Retail Federation issued statements Sunday opposing the expected settlement and urging the court to reject it. Once presented to the court, plaintiffs will have time to comment before the judge decides whether to approve the offer.

Kantor notes one issue is the proposed rules for surcharging. Merchants will reportedly be able to impose surcharges on a specific card brand, but not on cards issued by specific financial institutions. Not being able to negotiate with issuers creates “competitive friction, which is a dynamic the lawsuit was intended to address.”

Richard Hunt, executive chairman of the Electronic Payments Coalition, argues that rejecting the offer would be the merchants’ fault. “Retailers and the card companies agreed to enter into a settlement, and if the offer is rejected, it will be the second time in less than two years an offer has been rejected,” Hunt says. “Pure greed is why the corporate megastores oppose the settlement.”

Whether the lawsuit settles out of court remains uncertain. “As long as there are significant economics at stake, the war over payment acceptance fees will never end,” says Eric Grover, principal at Intrepid Ventures.