A two-decade fight with monopoly power in the payment system has arrived at a moment of truth, boiling down to one simple question: Will the courts bless price-fixing? Let’s hope not.
Last week, Demand Progress, American Economic Liberties Project, Consumer Reports, and Small Business Majority asked a federal court to reject a proposed antitrust settlement that would bless the Visa-Mastercard duopoly in credit-card payment services. The case, officially known as In re Payment Card Interchange Fee and Merchant Discount Antitrust Litigation, grew out of a grievance merchants and consumers have nursed for decades that has curdled into something worse over the last five years: Swipe fees.
Swipe fees are, ostensibly, the cost that merchants pay Visa and Mastercard for the service of processing transactions, an essential service for any business. But those companies’ profit margins of around 50 percent highlight how they are not earning money from swipe fees so much as extracting it. In 2025, U.S. merchants paid $198.25 billion in swipe fees—credit and debit cards combined—a figure that has very nearly doubled since the pandemic, even as the technology gets cheaper. Another way to conceptualize the cost of swipe fees: $1,200 annually per family. Most retailers and grocery stores, running on razor-thin margins, have nowhere to put that cost except onto the customer.
Consumers and merchants are both, in their own ways, locked into unhappy relationships with Visa, Mastercard, and the biggest banks. An oligopoly of five banks—JPMorgan Chase, Bank of America, Citigroup, Wells Fargo, and Capital One—issue 70 percent of all credit cards, and make a habit of charging higher interest rates than their smaller rivals. Visa and Mastercard process roughly 80 percent of all card transactions. They also impose an honor-all-cards rule, a contract clause with all the subtlety of a mob shakedown: if you take one of our cards, you must take all of them. It’s an offer any merchant who wants to stay in business can’t refuse.
The proposed settlement will freeze this all in place. If enacted, it will shave ten basis points—0.1 percentage points—off swipe fees that already run close to 3 percent of every purchase. This rounding error dressed up as relief then expires in five years regardless. It would also cap fees on so-called “standard” credit cards, a category covering only the small number of cards with almost no rewards attached. But swipe fees have spiked sharply, largely due to the rise in premium cards like the Chase Sapphire. In exchange, Visa, Mastercard, and the big banks walk away with sweeping immunity from future lawsuits.
Put plainly: The structure of the card market wouldn’t change a bit. Visa and Mastercard would keep setting swipe fees and raking in the take. They’d keep splitting most of it with the megabanks that already dominate card issuance, working hand in glove to keep the machine running. There would be exactly as much price competition on these fees as there is today: None. This is a cartel.
The legal maneuvering since the case was first filed in 2005 have produced a genuinely strange spectacle. Lawyers for a handful of merchants who originally filed the case are now pushing a settlement supported by Visa, Mastercard, and the very megabanks that dominate card issuance.
A far larger coalition of small businesses, consumer advocates, and antimonopoly activists is still fighting this out. In their court filing, Demand Progress and others opposing this ridiculously weak settlement didn’t mince words. The proposed deal, they told the court, is “not a settlement that will deliver antitrust relief to merchants” but rather “a joint monopolization scheme masquerading as a settlement.” Congress passed the Sherman Act in 1890 to stop this type of behavior. Courts are not supposed to bless monopolies; they’re supposed to break them up.
But Judge Brian Cogan, who has already given the settlement preliminary approval, seems trapped in the belief that structural change simply isn’t on the table. He applied the “fair, reasonable, and adequate” standard in reaching that decision. But Cogan tipped his hand on the real question at a hearing after his preliminary signoff: “to complain about having fixed interchange rates—what is the alternative that isn’t complete chaos?”
The monopolists—Visa and Mastercard—have pulled off something like a tyranny over the mind, one that has apparently spread to the bench. Here, as in so many other cases, the monopolists want the rest of us to believe there simply is no other way to run the world. Except there are other ways. The most glaring: Kill the honor-all-cards rule, which leaves small businesses at the mercy of financial monopolies with no leverage to speak of. They have no discretion to reject cards with higher swipe fees, which would force the likes of Visa and Mastercard to compete for merchant business by lowering the charges. Not accepting credit cards is not an option for any business that wants to stay afloat.
Rein in that rule, force the giant card issuers to compete on price and service for merchant business, and the entire market changes for the better. Bring down swipe fees to something sane—the European Union caps them at 0.3 percent—and they become a manageable cost of doing business.
The rise of the neo-Brandeisian antimonopoly movement casts this decades-old lawsuit in an entirely new light. What once read like a slog of a legal proceeding, generating little but transcripts and legal bills, now looks like a genuine chance to break open a payment system that was merely costly in 2005 and is downright extortionate today.
So, here is a genuinely radical proposal for this massive, long-running lawsuit: finally put Visa and Mastercard on trial for violating antitrust law. Let the evidence go before the public in open court and shine a light on the credit-card industry’s anticompetitive, rent-extracting playbook. It would almost certainly turn up what antitrust trials usually do: executives on the record, bragging about taking their customers to the cleaners, and financial information documenting how they do so systematically.
A trial could do what the settlement never could—honor the democratic tradition the antimonopoly movement was built on, foster genuine competition, and let small businesses and consumers keep more of the money they earned.
This piece originally appeared on the American Economic Liberties Project’s Substack, The Economic Populist.
