Settled for Certain? The Latest Proposed Settlement in the Visa and Mastercard MDL Litigation and Its Likely Effect on Surcharging

The multidistrict interchange class action litigation (“Interchange MDL”) against Visa and Mastercard has been going on for over 20 years before the United States District Court for the Eastern District of New York. A unique feature of class action litigation is that the parties are not free to simply settle the case on their own terms. Instead, the court must approve any class-wide settlement. The parties to the Interchange MDL have proposed various settlements over the years, but the district court and the United States Court of Appeals for the Second Circuit have been reluctant to accept them. November 10, 2025, saw the most recent efforts of the parties to resolve the long-running dispute through a negotiated truce. This article provides a look back at the most recently rejected settlement attempt, the contours of the newly proposed settlement, and the likely effect of the settlement should the court approve it.

The Settlement That Wasn’t

In 2024, the parties to the Interchange MDL proposed a settlement structure quite different than the one currently pending, and one that ultimately failed to win the court’s approval. The settlement-that-wasn’t would have offered merchants the option to surcharge credit cards at either 1% or 3%, with the choice hinging on how merchants treated other brands’ cards. Specifically, if merchants surcharged American Express cards, then the merchants would be permitted a 3% surcharge on Visa and Mastercard credit cards; if not, then merchants would be limited to a 1% surcharge on Visa and Mastercard credit cards. The settlement also proposed allowing merchants to surcharge differently based on the issuer of the card products, which would have been a marked shift from the current rules prohibiting discrimination based on issuer.

Had this settlement been approved, it would have presented a number of logistical challenges. On the card brand side, one card brand would typically not receive information about how merchants treat competitive brands. But that type of disclosure would have become the linchpin of the proposed surcharging program. On the merchant side, would small and medium-sized businesses — which presumably focus relatively little on the mechanics of payment processing — really have the wherewithal to implement varying surcharging programs based on the banks that issued consumer card? Of course, all these concerns became moot when the court rejected the settlement and the parties returned to litigation and the bargaining table.

The November 2025 Proposed Settlement

In November 2025, the parties returned to the court with a new settlement proposal in hand. We will focus on two key components:

Surcharging: While the mechanics of surcharging will largely remain the same if the settlement is approved, Visa and Mastercard would agree to relinquish their historic commitment to the “honor all cards” and “level playing field” rules. This means that merchants would have the discretion to accept some card products and decline others, as well as the freedom to surcharge either Visa or Mastercard (or both), but not other card brands. This marks a dramatic shift from the settlement structure last proposed in 2024. The logistics of surcharging will largely remain the same. Visa and Mastercard programs would still allow credit cards to be surcharged at 3% of the transaction value (although this would be a lowering of Mastercard’s current 4% cap). Surcharging programs would still be permitted at either the brand or product level, and disclosure signage would still be required. Discrimination in surcharging based on the issuer would continue to be disallowed — another difference from the last settlement proposal.

Lower Interchange Rates: The proposed settlement also promises to lower interchange rates set by Visa and Mastercard for consumer credit cards, making those cards 1% cheaper for merchants to accept than premium credit products.  

What Happens Next?

The settlement remains pending for the court’s consideration, and as the past has proven, approval is not a foregone conclusion. However, if the court approves the settlement, Visa and Mastercard will have 90 days from the date of approval to implement changes to their rules aligning them with the settlement’s terms.

For now, AGG will continue to monitor the docket in the Interchange MDL. Please contact AGG Payment Systems & Fintech co-chair Theresa Kananen with any questions.