The US Swipe-Fee Settlement Gets Its Day in Court, and the Steering Era May Begin
TL;DR
Visa and Mastercard are asking a federal judge to grant final approval of their long-running merchant swipe-fee settlement.
The hearing is set for 16 November 2026; the agreement is not yet finally approved.
Its bigger strategic change may be new merchant options to surcharge, discount or decline some higher-cost cards.
The US is moving towards more card steering, while Australia’s surcharge ban has removed that tool from merchants.
The settlement matters because it changes merchant choice, not just interchange
The proposed settlement could give US merchants new ways to manage which cards they accept and how they price them. Its interchange concessions matter, but the more significant change for payments strategy is the potential to steer customers away from higher-cost card products.
In a joint reply to objections, Visa and Mastercard urged the court to approve the agreement, arguing that Walmart and trade groups are repeating arguments the court has already rejected. They described the objectors as “no more than a vocal minority” in a class of more than 12 million merchants. The networks also argue that even a merchant win at trial is unlikely to produce the remedies objectors seek, and that appeals could prolong the case.
The litigation began in 2005. The court rejected a 2024 settlement before granting preliminary approval to the current agreement in June 2026. Walmart has separately argued that its inclusion in the class amounts to an unjust taking of its legal claim and sought to opt out; the networks call this a novel proposition. These are arguments before the court, not a final ruling. Payments Dive’s account of the court filing details the dispute.
What does the settlement offer merchants?
The agreement combines temporary interchange reductions with new acceptance and pricing options. Here are the merchant-facing terms described in the proposed settlement:
Term | What it does | Effective horizon |
Credit interchange reduction | Cuts credit interchange rates by 10 basis points | Five years |
Standard consumer credit cap | Caps standard consumer credit interchange at 1.25% | Eight years |
Selective card declines | Allows merchants to decline some higher-cost branded Visa and Mastercard premium and commercial credit cards | Subject to final court approval |
Card-specific surcharging and discounts | Gives merchants new rights to surcharge or offer discounts for specific cards to steer customers | Subject to final court approval |
The fee reductions should be seen in context: merchants paid an average of 2.35% on Visa and Mastercard transactions in 2024, according to the Nilson Report. The size of any benefit for an individual merchant will depend on its card mix and transaction profile; the settlement terms do not mean every merchant’s costs will fall by the same amount.
The dispute also has a separate legal-cost issue. Eighteen merchant-plaintiffs, including Crate & Barrel Holdings, Dick’s Sporting Goods, The Gap and Yum! Brands, have requested USD 36 million in objector fees from a related damages settlement. If granted, class counsel’s proposed fees would fall to USD 170 million.
When does the settlement take effect?
It has not yet received final approval; the next key event is the 16 November 2026 hearing. US District Judge Brian Cogan of the Eastern District of New York, in Brooklyn, will hear whether to grant final approval.
A hearing date is not the same as a decision. Visa and Mastercard are asking the judge to reject objections from Walmart, the National Retail Federation and the Retail Industry Leaders Association. Those groups and other objectors argue the agreement does not go far enough, including because merchants may not be able to turn away popular premium cards in practice. Any final effect depends on the court’s decision and the resulting order.
Why do steering rights change acceptance strategy?
If approved, these rights could make card steering a practical part of retail payment strategy rather than a theoretical pricing option. For merchants, the decision becomes less “Should we surcharge?” and more “Which card tiers, if any, should we steer, and what customer response are we willing to accept?”
Premium cards illustrate the trade-off. They can carry higher interchange, but often offer rewards that customers value. Large merchants argue that declining them may not be realistic if consumers carry and prefer those cards. A merchant that blocks a product might save on interchange for a transaction, but risks checkout friction, a smaller basket or reduced customer loyalty. A discount could encourage a lower-cost payment choice without the same message as a surcharge, but still needs to work for the business and its customers.
That makes this a portfolio decision by card tier and channel. Merchants will need to weigh fee differences against customer behaviour and test how changes affect conversion and service. In-store contactless payments, tap to pay and mobile wallet acceptance remain important parts of the checkout experience; any steering approach should be designed so that payment-choice messaging does not undermine a smooth checkout.
For POS companies, PayFacs, ISOs and acquirers, this is a product-road-mapping signal for 2027. Relevant capabilities may include card product identification and bin-range steering rules, product-level declines, surcharge compliance engines, receipt and disclosure requirements, and clear merchant education. E-commerce teams will need to consider how pricing and card-choice prompts appear at checkout. The challenge is not simply making a rule available; it is helping merchants apply it consistently without creating an unacceptable customer experience.
For a related view of how network pricing changes can affect merchant costs, see our analysis of Visa’s Canadian small-merchant interchange cuts.
How does Australia’s surcharge ban create the opposite approach?
The US settlement points towards more merchant choice, while Australia has removed card surcharging as a steering tool. Australia’s surcharge ban took effect on 1 October 2026, so businesses can no longer add a separate surcharge to covered card payments. The Reserve Bank of Australia estimates that its card-payment reforms will reduce merchant wholesale card costs by AUD 910 million annually; that is distinct from the surcharge amounts consumers previously paid. See the RBA’s overview of the reforms.
These markets are addressing the same underlying tension (payment acceptance costs and how they are shared) but using opposite mechanisms. The US proposal would expand the options available to merchants if approved. Australia’s policy removes surcharging while reducing wholesale costs through changes to interchange settings.
For merchants operating across borders, steering and surcharge settings cannot be treated as a single global configuration. Rules must be managed by market: potentially available in the US if the settlement is approved, but switched off in Australia under the new ban. POS and e-commerce providers will need market-specific configuration, while merchants will need clear controls, guidance and testing. That implementation gap is where specialist payments advice can help turn regulatory change into workable acceptance strategy.
Frequently asked questions
What did Visa and Mastercard agree to in the swipe-fee settlement?
The proposed settlement includes a 10-basis-point reduction in credit interchange rates for five years, a 1.25% cap on standard consumer credit interchange for eight years, and new merchant options to decline certain higher-cost cards, surcharge specific cards or offer card-specific discounts. It still requires final court approval.
When will the credit card fee settlement take effect?
The final-approval hearing is scheduled for 16 November 2026. The hearing itself does not make the settlement effective; the judge must decide whether to approve it.
Can US merchants surcharge credit cards under the settlement?
The settlement would give merchants new rights to surcharge specific cards, if the court grants final approval. It is not yet a final, operative permission.
What is the honour-all-cards rule and how would the settlement change it?
The honour-all-cards rule generally requires a merchant that accepts one card from a network to accept all cards from that network. The proposed settlement would create an exception allowing merchants to decline some higher-cost branded Visa and Mastercard premium and commercial credit cards.
Key takeaway
The settlement’s lasting strategic significance may be merchant control over card acceptance, not the interchange reductions alone. If approved, it will put steering decisions into the acceptance stack, where technology, pricing and customer experience must be designed together.