The swipe fee settles, for now
Two decades of litigation produced a settlement that lowers rates slightly and loosens the rules. The largest merchants would rather go to trial.
SumUp via UnsplashInterchange is the fee a merchant pays each time a customer taps a card, and the argument about who sets it has been running in American courts since 2005. It has now produced a settlement, and the merchants it was brought for are not satisfied.
The terms are a mixture of a small price concession and a larger change to conduct. Reporting on the agreement describes a modest reduction in rates over several years alongside caps and more freedom on surcharging and on which categories of card a merchant must accept.
The rate cut is the part that reads as small, because it is. A reduction measured in a fraction of a percentage point matters at scale and does not change the structure that produced the dispute.
The conduct terms are the substantive part. Rules that required a merchant accepting one card to accept nearly all of them, and that constrained steering customers toward cheaper payment methods, are what removed price competition from the system.
That is why the objections come from the largest retailers rather than the smallest. Reporting on the opposition describes major retail groups preferring to risk a trial over accepting the terms, which is a position only a plaintiff with resources takes.
Their calculation is straightforward. A settlement resolves the claim for a long period; a trial could produce a structural remedy. A large merchant with a large fee bill has the balance sheet to prefer the second.
Smaller merchants have the opposite incentive and less voice in the process. A modest reduction arriving soon is worth more to a business with thin margins than a better outcome several years and one appeal away.
The surcharging provisions are where consumers may notice something. Greater freedom to pass the cost through means more checkouts displaying a card fee, which moves an invisible cost into view and is not universally popular.
Whether that is progress depends on your theory of the problem. A fee embedded in the shelf price is paid by everyone including cash customers; a fee displayed at checkout is paid by the person choosing the payment method.
The settlement is not final and the objections are live, so the practical answer for anyone building on card economics is that the rate is roughly stable and the rules are the thing about to change.