The Longest Antitrust Case in U.S. History Just Reshaped Credit Cards
Our flashy rewards credit cards can now be denied by merchants.
One of the longest-running antitrust cases in U.S. history is finally in the final innings.
After two decades of litigation, Visa and Mastercard have reached a new settlement with merchants who sued them in 2005 over “swipe fees”—the 2-2.5% cut card networks take on every transaction.
The claim was simple: Visa, Mastercard, and major banks conspired to fix these fees at artificially high levels, violating antitrust laws. If approved, this settlement could fundamentally change how credit cards work in America.
The Problem Merchants Were Fighting
Every time a customer swipes a credit card, the merchant pays an “interchange fee” to process the transaction. For most cards, that’s 2-2.5% of the purchase price.
Merchants argued these fees were rigged. They claimed Visa and Mastercard colluded with banks to keep rates artificially high while forcing merchants to accept all cards—including expensive premium rewards cards—through the “honor all cards” rule.
Translation: If a business wanted to accept any Visa card, it had to accept every Visa card, even the ones with 3% fees subsidizing airline miles for wealthy customers. Merchants couldn’t steer customers toward cheaper payment options. They were stuck.
Why It Took 20 Years
This wasn’t the first attempt at a settlement. In 2012, Visa and Mastercard proposed a $7.25 billion deal. Courts rejected it. In March 2024, another settlement failed. The problem? Judges ruled the deals didn’t provide enough actual changes to business practices—just cash payouts that didn’t fix the underlying system.
Merchants wanted structural reform, not just money. They wanted the freedom to choose which cards to accept and how to price them.
What’s in the New Deal
The proposed settlement is valued at $38 billion in “injunctive relief”—lawyer speak for forcing companies to change how they operate.
Fee reductions: Visa and Mastercard will cut interchange fees by 0.1 percentage points for five years and cap standard consumer card rates at 1.25%.
Merchant flexibility: The bigger change—merchants now get the freedom to:
Surcharge credit card transactions (pass the fee to customers)
Refuse certain high-cost card categories, like premium rewards cards
For the first time, businesses can push back on the “honor all cards” rule. They can say no to expensive cards or add a credit card fee at checkout.
What This Actually Means
Merchants now have two new options:
1. Pass the fee to customers. That 2-2.5% swipe fee? Businesses can add it as a surcharge at checkout. Your $100 purchase might now cost $102.50 if you pay with a credit card.
2. Refuse high-cost cards. Premium rewards cards like the Chase Sapphire Reserve or American Express Platinum charge merchants higher fees to fund those travel perks. Now, merchants can simply say no to those cards.
If you carry a flashy rewards card, you’re now at risk of being told “we don’t accept that here” at checkout.
This comes at an interesting moment. The same day the settlement was announced, Square revealed that all 4 million of its merchants can now accept Bitcoin as payment.
Payment infrastructure and financial technology are changing rapidly. The mainstream adoption of stablecoins and blockchain technology is at the forefront of this shift. Breaking up the Visa and Mastercard monopoly? That’s the first step toward a future where merchants have real alternatives.
Stablecoins could fit seamlessly into this new system—offering instant settlement, lower fees, and no card network middleman. We’ll explore what stablecoins are and how they work in the next piece.
Stay curious. Follow the money. Have fun.