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Merchant groups late Friday filed written complaints regarding the latest settlement offer in their two-decades old lawsuit against Visa Inc. and Mastercard Inc. challenging card swipe fees.
The settlement offer, which follows a rejected offer in 2024, was made in November.
Merchant groups filing complaints were The National Association of Convenience Stores (NACS) and Circle K Stores Inc. Attorneys representing the National Retail Federation filed a separate complaint, as did a group of academics following the case.
Key concerns those filing the complaints have with the latest settlement offer are interchange rates, Visa and Mastercard’s honor-all-cards rule, and surcharging, all of which contribute to creating what merchants see as an anti-competitive card-acceptance market.
In their complaint, NACS and Circle K argue the proposed interchange-rate reductions and caps in the settlement are not meaningful.
“The proposed settlement would reduce the ‘average Effective Interchange Rate’ by ten basis points, a trifling increase from the seven-basis point reduction Judge Brodie rejected last year,” NACS and Circle K contend. “In fact, it’s a step backward because average interchange rates increased by nine basis points between 2024 and 2025. The proposed settlement would thus leave rates approximately where they were in 2023, nearly two decades after this litigation began, and at a higher rate than the 2024 proposed settlement.”
What merchants are seeking is the right to negotiate interchange rates with individual cards issuers, which follow the interchange schedules set by Visa and Mastercard, says Doug Kantor, a Merchants Payment Coalition executive committee member and general counsel for the National Association of Convenience Stores.
“Merchants can’t strike individual deals with card issuers, while businesses in other markets do this all the time [with suppliers],” Kantor says.
In addition, NACS and Circle K argue that retaining the honor-all-cards rule does not provide adequate relief and contributes to what they describe as the “excessive” interchange fees merchants pay.
Visa’s and Mastercard’s honor-all-cards rules stipulates that merchants accepting Visa- and Mastercard-branded cards must accept all cards issued on the network, even if interchange rates for some of those cards, such as rewards cards, may be higher than others.
“The honor-all-cards rule creates a cartel in which all issuers have to be dealt with as one,” Kantor says. “We contend price competition is part of the honor-all-cards rule, which NACS and Circle K have argued from the beginning should be eliminated.”
In their complaint, NACS and Circle K argue that “if merchants could deny some or all credit cards from a particular bank, it could use that denial as leverage to negotiate competitive rates with those particular banks (as opposed to only dealing with Visa or Mastercard, who act on behalf of all issuers).”
While Visa and Mastercard have included provisions in the settlement to allow merchants to levy surcharges to help offset the cost of swipe fees, their offer does not fix the underlying problem of a lack of price competition, according to the groups filing complaints.
“Being able to collect a toll to offset the cost of another toll does not change the fact that the initial toll is too high,” says Kantor.
Surcharging also creates an uneven playing field for merchants, as some states prohibit the practice, groups filing the complaints argue. Hence, the surcharging provision doesn’t address the underlying problem of a lack of price competition in swipe fees, Kantor argues.
In response to the complaints, the Electronic Payments Coalition, which represents Visa and Mastercard as well as banks, questions whether the concessions made in the latest settlement offer will be enough for merchants, even though they address the issues raised by merchants when it comes to card-pricing competition. The EPC contends that the latest complaints from merchant groups move the goal posts further out.
After the complaints were filed Friday, the EPC reissued a statement from November after the settlement offer was made and indications arose that merchants had many objections to it.
“Both sides worked in good faith to reach this new, comprehensive agreement,” EPC Executive Chairman Richard Hunt said at the time. “It provides businesses of all sizes with meaningful and significant concessions that give more flexibility and choice in card acceptance, greater ability to pass along card processing costs, a more than 25 percent reduction on standard credit cards, and capped interchange rates across the board. This agreement now moves forward for judicial review.
“With this agreement, lobbyists for corporate mega-stores and a few politicians can end their misguided crusade – at both the federal and state levels – to undermine our safe, secure, and efficient payment systems through untested government mandates.”
Next steps in the settlement process can include a hearing for oral arguments for and against the settlement offer, and a preliminary ruling for or against the settlement. In order to reach final approval of the settlement all members of the class filing the lawsuit will have an opportunity to review and comment on the settlement.
