How the Visa-Mastercard card fee case may end

The most likely endgame is court approval of a revised settlement that modestly lowers average credit interchange, caps some rates for years, and weakens “honor all cards” so merchants can reject or surcharge high‑cost plastic—but with continued political and merchant pressure to go further.

Where the case stands

• The Brooklyn MDL over credit card interchange and merchant discount fees has produced a new, revised settlement proposal after Judge Brodie rejected an earlier deal in June 2024.

• Visa and Mastercard have since negotiated a package that includes both monetary relief (tens of billions in putative savings) and forward‑looking changes to network rules and fee structures.

• The proposal is before the Eastern District of New York and still requires class certification and final approval; merchant trade groups have already signaled they will object.

Key settlement terms on the table

Sources describing the “how it may end” scenario converge on a structure with several core elements:

• Rate reductions and caps

  • Cut credit interchange by about 10 basis points for five years from current levels.

  • Impose a 1.25% interchange rate for standard consumer credit cards for around eight years, a reduction said to exceed 25% versus some current benchmarks.

  • Slightly lower average “swipe” fees across the portfolio, generating marketing claims of more than $200 billion in merchant savings over the life of the deal, though critics argue net savings are far smaller after issuer offsets.

• Relaxing “honor all cards” and acceptance rules

  • Allow merchants to decline certain higher‑cost Visa and Mastercard credit cards, particularly premium rewards and some commercial cards, instead of being compelled to accept all products within a brand.

  • Let merchants steer transactions toward lower‑cost card types or alternative payment methods at the point of sale.

• Surcharging and pass‑through rights

  • Expand merchants’ ability to add surcharges to some card payments, up to about 3% on certain premium cards, within the confines of state law.

  • Provide what some filings describe as “unfettered” or significantly broadened rights to pass swipe costs directly to card‑using customers, creating visible price differentials between payment types.

• Monetary and class aspects

  • Stack on top of, and in some cases restructure, the existing multibillion‑dollar cash fund settlement (roughly $5.54 billion) that merchants can claim for historic overcharges for 2004–2019 transactions.

  • Introduce a very large “headline” value for forward‑looking relief—variously cited around $38 billion in one revision and roughly $200 billion in projected fee savings over time—designed to persuade the court that the injunctive relief is meaningful.

Illustrative impact on a transaction

Consider a $100 grocery purchase on a standard consumer Visa credit card: the interchange under current schedules might be roughly in the $1.35\%$ range (about $1.35). Under the settlement terms referenced above, that could drop close to 1.25% (about $1.25) for several years, with the merchant retaining the $0.10 difference on each such transaction or potentially steering consumers to even cheaper debit or non‑premium credit options.

Likely path to resolution

• Judicial scrutiny but strong incentives to settle

  • Judge Brodie’s 2024 rejection showed the court is willing to push back, especially around the effectiveness of changes to “honor all cards” and merchant steering.

  • The revised structure more directly attacks those issues by codifying merchants’ rights to reject expensive products and to surcharge, which increases its chances of eventual approval compared with the prior deal.

  • After roughly two decades of litigation, both networks and many large merchant groups have strong incentives to bank some relief and reduce legal uncertainty, making a negotiated settlement more probable than a merits trial.

• Merchant opposition and possible tweaks

  • Trade organizations such as convenience‑store and small‑merchant groups argue the settlement is too complex to exercise in practice and doesn’t cut fees enough, and they intend to urge the court to reject or modify it.

  • The court could respond by requiring clarifications, narrowing releases, or modestly enhancing merchant rights before granting approval, but a complete return to square one would come with heavy delay and litigation costs.

• Appeals and implementation lag

  • Even with approval, objectors will almost certainly appeal, potentially to the Second Circuit, delaying full implementation of some injunctive terms.

  • In the interim, networks may start adjusting pricing strategies and products in anticipation of the new rule set, much as they did around earlier partial settlements and Durbin‑related reforms.

Strategic implications for merchants and issuers

• For merchants

  • Larger and more sophisticated merchants are best positioned to exploit routing, steering, and card‑acceptance differentiation to reduce effective costs; smaller merchants may struggle with the operational and customer‑experience complexity.

  • Visible surcharges or card refusals could create friction at checkout and may be constrained by state‑level surcharging laws and enforcement realities, limiting practical uptake despite formal rights.

• For issuers and networks

  • Issuers may respond by tweaking rewards, annual fees, or co‑brand economics to preserve margins under capped standard‑card rates and incremental merchant steering.

  • Networks are likely to emphasize value propositions (fraud protection, authorization rates, ticket size) and may shift economics toward premium or non‑capped product categories where merchant acceptance remains strong.

• For policymakers and future regulation

  • The settlement is unlikely to end political scrutiny; advocates for interchange regulation (e.g., credit‑card Durbin‑style caps or routing mandates) may argue that litigation has not delivered sufficiently lower fees.

  • Conversely, Visa and Mastercard will frame the agreement as proof that the market and private law can deliver “clarity, flexibility, and consumer protections,” and use it to resist statutory caps.