Interchange Fee Settlement: Retailers Say Card Surcharge Rules Would Be a Heavy Lift

On Monday, Walmart and other major merchants told a federal judge that building surcharge-and-discount schemes for cards envisioned by a tentative card-fee deal would require substantial effort.

Judge Brian Cogan of the United States District Court convened a hearing so opponents could detail their concerns with the proposal.

At the same time, Visa, Mastercard, and counsel for the plaintiff class urged Cogan to grant approval and answered objectors’ critiques.

Proposed Settlement Terms and Court Review

The card-interchange accord, covering about 12 million United States merchants, seeks to end 21 years of litigation dating to mid-2005. The networks and the class’s attorneys support the arrangement, which is a real court-filed proposal now awaiting judicial review.

Interchange fees are the per-transaction charges paid by a merchant’s bank to the cardholder’s bank when a card purchase is processed. They exist in part to help fund card issuance, fraud controls, and the broader costs of operating card-payment programs.

Interchange is built into card acceptance as a way to compensate the card-issuing side of the system for credit risk, fraud prevention, and account servicing.

Cogan is weighing whether the November agreement is “fair, adequate and reasonable” under antitrust standards for preliminary approval.

Across nearly three hours, he questioned lawyers on both sides without revealing his own view and said he would issue a decision promptly.

Under the terms, key provisions would include:

• Credit interchange falls by 10 basis points for five years.
• Standard consumer cards carry a 1.25% rate for eight years.
• Merchants may refuse certain higher-cost premium and commercial cards.

Merchant Concerns and Customer Friction

Retailers highlighted several practical concerns:

• Merchants can add surcharges.
• Merchants can offer discounts.
• Large chains find it impractical to turn away premium reward cards.

Mary Miller, counsel for the National Association of Convenience Stores and Circle K, said the framework shifts the task of correcting an anticompetitive market to merchants, leaving “a lot of work” for them.

She added that it seems illogical to make the alleged victims implement changes and then explain price differences to customers at checkout.

Cogan also pressed on potential consumer confusion about card acceptance and asked plaintiffs to assess their odds of success at trial.

Jesse Panuccio of Boies Schiller Flexner, representing Walmart, said the design anticipates merchants changing customer incentives by launching in-house loyalty programs.

He argued that retailer-run rewards are unlikely to replace the banks’ established premium-card incentives.

Panuccio said the proposal effectively commands Walmart to create a new rewards system it does not currently operate.

Visa’s attorney, Michael Shuster of Holwell, Shuster & Goldberg, called the honor-all principle an article of faith that guided the company for 60 years.

He described revisiting that rule as a significant concession long sought by merchants and said it is painful for the network to make.

Shuster also suggested that the change could alter competition among card brands, including by giving American Express a marketing opening around acceptance expectations.

Court Timelines, Risk, and Market Structure

Lawyers for the networks and class counsel Steve Shadowen argued that the objectors underestimate the litigation risk of going to trial and then appealing.

Shuster noted that such a path could take multiple years, whereas the compromise would deliver relief to merchants far sooner.

Opposing merchants counter that the deal leaves intact the arrangement where networks set fees on behalf of issuing banks, a structure that, Miller said, dampens bank-to-bank competition.

Walmart told Cogan it needs authority to negotiate interchange directly with banks to cut card-transaction costs and to set issuer-specific acceptance policies, not merely card-type rules.

Miller said the top 10 card issuers account for 84% of merchant transaction volume.

She maintained that direct bargaining and issuer-level flexibility would neither upend the networks nor harm consumers, disputing the networks’ warnings.

Case History and Opt-Out Debate

The proposal sits within a longer procedural history:

• Third merchant deal in the last decade.
• Earlier settlement rejected by Judge Margo Brodie two years ago.
• 2016 pact voided by a federal appeals court.
• Case reassigned to Judge Cogan last year.

Walmart and national retail trade groups also urged Cogan to allow plaintiffs to opt out of this injunctive-relief agreement, as merchants could in a separate damages track litigated in Chicago and Manhattan.

Debra Greenberger, an attorney for the National Retail Federation and Retail Industry Leaders Association, said that if the deal were truly beneficial, the parties would welcome an opt-out, yet none was offered.

Panuccio added that denying the class any right to opt out is likely unconstitutional.

For merchants looking for practical settlement information, the case discussed here remains at the approval stage: the court has not yet entered final approval, and there is no court-approved initial partial distribution in this proceeding.

Eligibility in class-action settlements typically turns on whether a business fits the court-defined class, often based on whether it accepted Visa and/or Mastercard during the relevant period and paid the challenged fees. Options for eligible parties commonly include filing a claim (if a claims process is authorized), objecting to the settlement, or opting out when the court permits it.

If and when a claims process is opened, filing generally involves submitting a claim form through the settlement administrator and providing business identifiers and transaction information as required by the form. The official site that has been used for case notices and administration materials is .

How much any claimant receives, if payments are authorized, generally depends on transaction volumes and other allocation rules approved by the court, with individual awards typically calculated on a pro rata basis after administrative costs and any court-approved deductions. In many class actions, payments are issued only after final approval and any appeals are resolved, which can take months and sometimes longer; for this proposal, no distribution timeline has been set because it is still awaiting court action.