The National Grocers Association expressed disappointment after a federal judge granted preliminary approval to a revised $38 billion settlement between Visa, Mastercard and U.S. merchants over credit card interchange fees, calling on Congress to pass legislation the association says would deliver more meaningful reform.
U.S. District Judge Brian Cogan in Brooklyn, New York, ruled June 9 that the settlement covering more than 12 million merchants was “fair, reasonable and adequate” and indicated he was likely to grant final approval, according to Reuters.
Announced in November, the settlement is intended to end litigation that began in 2005, when merchants accused Visa, Mastercard and banks of conspiring to violate U.S. antitrust law through the fees charged to process credit card transactions, the Reuters report stated.
“The National Grocers Association is disappointed that the court has chosen not to address the reasonable concerns raised by objectors and improve the proposed B2 settlement in a way that would meaningfully increase competition and reduce swipe fees for merchants and consumers,” NGA said in a statement.
“At a time when families are focused on affordability, Visa, Mastercard and the nation’s largest banks continue to benefit from a lack of competition in the credit card payments market. Congress should act by passing the bipartisan Credit Card Competition Act (CCCA), a commonsense solution that would increase competition, help lower costs, and deliver savings for consumers and Main Street businesses alike.
“With bipartisan support in Congress and the endorsement of President Trump, lawmakers should seize this opportunity to deliver meaningful reform by passing the CCCA.”
Under the settlement’s terms, Visa and Mastercard agreed to lower swipe fees by 0.1 percentage point for five years, while standard consumer rates would be capped at no more than 1.25 percent for eight years, according to Reuters.
Merchants also could choose whether to accept cards in distinct categories – commercial cards, premium consumer cards and standard consumer cards – a provision that would end the longstanding “Honor All Cards” rule requiring merchants to accept all Visa and Mastercard cards or none. Merchants also gained more options to impose surcharges on customers.
The ruling came nearly two years after a different judge rejected a proposed $30 billion settlement as too small, according to Reuters. U.S. District Judge Margo Brodie denied preliminary approval of that agreement in June 2024 after many merchants and retail trade groups argued fees would remain too high and the card networks would retain too much control over how transactions are handled.
NGA, the National Association of Convenience Stores, the Retail Industry Leaders Association, Walmart and dozens of other merchants filed objections late last year, according to Payments Dive. The objections focused on the temporary nature of the fee caps over the settlement’s eight-year term and on provisions shielding Visa and Mastercard from future litigation over their fees.
When the settlement was announced in November, Chris Jones, NGA chief government relations officer and counsel, said in a statement that independent grocers operating on net margins of less than 2 percent have been hit hardest by rising swipe fees, which grow faster than inflation and cost consumers and businesses more than $100 billion per year.
Other merchant groups echoed NGA’s response to the ruling. “The vast majority of merchants oppose this proposed settlement,” said Doug Kantor, Merchant Payments Coalition executive committee member and NACS general counsel, in a statement following the ruling.
Kantor said the coalition expects more objections to be filed. The National Retail Federation also opposed the settlement and plans further challenges, according to Reuters.
The Credit Card Competition Act referenced in NGA’s statement was reintroduced Jan. 13 by Sens. Roger Marshall, R-Kan., and Dick Durbin, D-Ill., after President Trump endorsed the legislation that morning, according to a news release from Durbin’s office.
The bill would require banks with more than $100 billion in assets to enable at least two unaffiliated card networks, including at least one outside Visa and Mastercard. Reps. Lance Gooden, R-Texas, and Zoe Lofgren, D-Calif., introduced a companion bill in the House the same day, according to Payments Dive.
Analysts predicted an appeal of the preliminary approval, according to American Banker, and final approval proceedings are still ahead in the Eastern District of New York.