Major Retailers Object to Credit Card Settlement What You Should Know

A significant dispute is unfolding in federal court that could affect what you pay when you swipe your credit card at checkout. The Merchant Payments Coalition, representing nearly 1,000 retailers and trade associations, has filed an objection to a proposed $38 billion settlement involving Visa and Mastercard over credit card interchange fees, commonly called swipe fees.

The case stems from a lawsuit filed in 2005 alleging that Visa and Mastercard violated antitrust law by working together to set the fees that retailers must pay when customers use credit cards. These fees, typically 2 percent to 3 percent of each transaction, represent a major operating expense for stores. In fact, swipe fees are now the second-highest cost for many retailers, surpassed only by labor expenses.

Why Retailers Say the Settlement Is Not Enough

The federal court gave preliminary approval to the settlement in June, with payments expected to begin this month. However, retailers argue the deal does nothing to solve the underlying problem. According to the Merchant Payments Coalition, the settlement grants credit card companies broad immunity from liability while offering merchants only temporary and inadequate relief packed with limitations.

The core complaint centers on the “honor all cards” rule, which forces retailers to accept every credit card from every bank, regardless of how much the card issuer charges in swipe fees. The new settlement would allow stores to reject only “premium” cards, such as those offering rewards programs. But this provision has little real impact because premium cards account for 90 percent of all credit card spending.

Additionally, the settlement would reduce swipe fees by just one tenth of a percentage point, which retailers say is far too small given that these fees have ballooned by 80 percent since the pandemic. Last year alone, merchants paid a record $198.25 billion in swipe fees, according to coalition data. When compared to the average swipe fee rate of 2.36 percent that stores paid in 2025, the proposed fee reduction amounts to minimal relief.

Previous Settlements Have Failed Before

This is not the first time courts have rejected credit card settlement proposals. In 2016, the U.S. Circuit Court of Appeals overturned an earlier settlement after merchants argued it would not meaningfully curb the card companies’ pricing practices. A second proposed settlement was rejected in 2024 by a federal judge who expressed concern that the structure did not adequately address how Visa and Mastercard set prices.

The current proposal mirrors much of what was rejected last year, suggesting little has changed in the negotiating position of the credit card networks. Retailers also point out that another provision, allowing stores to charge up to a 3 percent surcharge for credit card use, would likely backfire. This would frustrate customers and prove too complicated for retailers to implement due to varying state laws and card network rules. Across every deal category we track, discounts and fees affect shopping behavior significantly.

What This Means for Your Shopping

The outcome of this legal battle could influence how much you pay at the store. If retailers succeed in blocking the settlement and winning more substantial relief, stores might reduce prices or redirect costs elsewhere. Conversely, if the settlement proceeds unchanged, high swipe fees will continue to be passed on to consumers through higher prices at checkout.

While this lawsuit has unfolded behind the scenes, Congress is also considering legislative action. The proposed Credit Card Competition Act would require large banks to process cards through at least two competing networks instead of just Visa or Mastercard. Supporters say this measure could save consumers $17 billion annually by introducing competition into card processing, much as online eyewear retailers have expanded manufacturing to speed up delivery and offer better prices.

Retailers Continue to Push Back

The coalition filing demonstrates strong merchant opposition across all store types and sizes. Grocery chains, supermarkets, convenience stores, gas stations, and online merchants all have signed on to object to the deal. A member of the coalition’s executive committee stated that the settlement amounts to a scheme for approving the bad practices of the credit card industry rather than fixing them.

Mastercard responded by saying the settlement delivers what the court expects and balances the interests of all parties. Visa did not provide comment. The judge must now decide whether to accept the objections and reject the settlement again, or allow it to move forward. As negotiations continue, shoppers should understand that retail fees directly impact pricing and availability at stores where they shop. The merchant community’s continued resistance suggests this battle is far from over.