How Interchange Works
When a card is used, the merchant receives less than the purchase price. A portion, the interchange fee, goes to the bank that issued the card, with the rate set by the card network rather than negotiated between the merchant and that bank.
Because thousands of issuing banks all apply the network-set rate, merchants cannot negotiate individually with each. That structure is the foundation of the antitrust claims.
Rewards are funded by interchange
Premium rewards cards carry higher interchange rates, which is how points and cashback are funded. That is why merchants pay more to accept them, and why rules preventing merchants from steering customers toward cheaper cards have been central to the litigation.
The Antitrust Theory
The claim is that networks and their member banks collectively set interchange rates, which functions as horizontal price fixing among competitors who would otherwise set their own rates.
Accompanying network rules reinforced it: honour-all-cards requirements obliging merchants accepting one card to accept all of that network cards including expensive premium ones, and anti-steering rules restricting merchants from encouraging cheaper payment methods.
Resolutions have combined monetary settlements with rule changes permitting surcharging in some circumstances and relaxing steering restrictions, though state laws and network conditions still constrain what merchants can do.
Practical Effects
Merchant acceptance costs are generally embedded in retail prices rather than charged separately, so the fee structure affects everyone including customers paying cash. That is the practical answer to who ultimately bears interchange.
Where surcharging is permitted, network rules require clear disclosure before the transaction and cap the amount. Several states restrict or prohibit it entirely, so the position varies by location.
Merchant settlement claims have strict deadlines
Businesses that accepted cards during covered periods may be eligible for interchange settlement payments, but claims require processing records and are subject to firm deadlines. Many eligible merchants never file.
Before You Act
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Interchange Fee Litigation: Card Network Rules, Merchants and Consumers: Frequently Asked Questions
Answers to the most common questions about this case and your legal options.
What is an interchange fee?
A portion of each card transaction paid to the issuing bank, at a rate set by the card network rather than negotiated between merchant and bank.
What is the antitrust theory?
That networks and member banks collectively set interchange, functioning as price fixing among competitors who would otherwise set their own rates.
What are honour-all-cards rules?
Requirements that a merchant accepting one card from a network must accept all of that network cards, including higher-cost premium rewards cards.
Do cash customers pay for card fees?
Effectively yes. Acceptance costs are generally embedded in retail prices rather than charged separately, so all customers bear them.
Can merchants surcharge card payments?
In some circumstances, subject to network disclosure requirements and caps, though several states restrict or prohibit surcharging entirely.
Legal Disclaimer
This article is general legal information, not legal advice, and does not create an attorney-client relationship. Case status, eligibility criteria, and any amounts described are as reported at the date shown and may change. Consult a licensed attorney in your jurisdiction about your own situation.