The proposed credit card swipe fee settlement introduced today by Visa and Mastercard should be rejected because it will not benefit merchants and consumers. It would provide the credit card giants legal immunity to increase fees and anti-competitive practices, according to the National Association of Convenience Stores (NACS).
The latest proposed settlement is very similar to the settlement offered by the credit card industry in June 2024, which was rejected by U.S. District Judge Margo Brodie at the preliminary stage, an extremely unusual practice that is applied when a settlement lacks sufficient merit to even consider public comments.
Today’s settlement offer is the third one proposed by the credit card industry stemming from a 2005 class-action lawsuit alleging that Visa and Mastercard, which control more than 80% of the credit card market, violate federal antitrust law by centrally price-fixing swipe fees charged by banks that issue cards under their brands and organizing these banks into a cartel structure. Both of the prior proposed settlements were rejected by the courts.
“No one should be fooled by the credit card industry’s smoke and mirrors,” said NACS Senior Vice President of Government Relations Lyle Beckwith. “This proposed settlement endorses business as usual, including by letting Visa and Mastercard increase their own fees without any restraints. That could erase the benefits that this settlement pretends to provide. Approving this settlement would contradict the ruling that Judge Brodie made just last year and would declare open season for the credit card companies to hit merchants and their customers with more price increases.”
"This is the third time that the credit card industry has tried to push a one-sided settlement through, despite the opposition of retailers. To be clear, these settlements have been agreed to by class-action attorneys who stand to make millions by agreeing to a flawed settlement...not by the retailers—or consumers—who have been at the mercy of the credit card industry for years. This proposed ‘settlement’ does nothing to stop their predatory and collusive behavior,” Beckwith added.
The Credit Card Competition Act (CCCA), which has bipartisan support in both the House and Senate, would create choice for the processing of credit card transactions by requiring the largest U.S. banks that issue Visa or Mastercard credit cards to allow transactions to be processed over at least two unaffiliated card payment networks—the same process that has been used for debit card transactions for more than a decade. The CCCA is supported by almost 2,000 companies and nearly 300 trade associations, as well as a broad group of consumer, labor and pro-competition organizations.
Credit and debit card swipe fees—which have increased 70% since 2020 and reached a record $187.2 billion in 2024—are convenience retailers’ second-highest operating expense after labor. The fees are far too high to absorb, especially for smaller, family-run businesses, and serve as an inflation multiplier, costing the average U.S. family nearly $1,200 a year. Credit card swipe fees are higher in the United States than any other developed country and are nearly eight times the rate in Europe.
The credit card giants’ proposal does not address Visa and Mastercard’s price-fixing of interchange fees that those companies set but are received by the banks, which is at the heart of the class-action lawsuit. Instead, it proposes a slight, temporary decrease in interchange fees—from an average of 2.35% to 2.25%, essentially the same rate as in 2023. However, the settlement allows Visa and Mastercard to increase their own network fees, a separate part of the overall swipe fees paid by merchants, by an unlimited amount, which could reduce or eliminate the proposed interchange fee reduction.
There would be huge benefits to Visa and Mastercard with their proposed settlement: It would block all lawsuits related to swipe fees. In addition, the proposal would slightly modify the honor-all-cards rule but allow Visa and Mastercard to reclassify cards in order to nullify those changes.
“The imaginary relief that this proposed settlement claims to offer is insulting to every one of us who ultimately foot the bill for higher credit card fees in the form of higher prices for gas, food and other essentials. The courts have emphatically rejected the two previous settlement offers, and this one should be rejected as well,” said Beckwith. “It is very clear that Visa and Mastercard have no interest in fixing the broken system—and will do everything they can to make it worse. We need Congress to pass the Credit Card Competition Act to provide relief to Main Street businesses and their customers.”