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In a statement issued following the circuit court ruling, • Fraud tools
the trade group America's Credit Unions urged "the • Profit Margin
Illinois legislature to recognize that IFPA was a mistake
and repeal this misguided law." • Other fees may also be included, such as monthly
services, and PCI compliance fees
Mismatched priorities
• Online merchants pay gateway fees, as well as
The legal morass involving interchange can be attributed tokenization/security fees
to a mismatch of priorities. But the reality is that the • Additional costs that can get factored into discount
priorities of the financial institutions that issue Mastercard fees include charges related to chargebacks and other
and Visa cards, as well as the card brands themselves, and
the priorities of retailers are pretty closely aligned. All Note: ISOs, merchant level salespeople and other merchant
services providers may want to keep this list handy for
parties want consumers to buy stuff and to pay for it with
their credit and debit cards. Where they diverge is on the discussions with clients, prospects or lawmakers about
discount or swipe fees.
value affixed to those priorities.
DOJ suit spawns 20-year case
The FIs and card brands want (need) to be compensated for
getting cards in consumers wallets, the rewards programs The longest pending litigation brought against the card
that accompany those cards to encourage usage, and the brands by merchants was filed in 2005. Merchants alleged
investments they've made in network infrastructure, fraud that Visa and Mastercard, along with the major card-issuing
protections and security. Merchants, on the other hand, banks, ran afoul of federal anti-trust laws by conspiring to
feel they should pay as little as possible for accepting fix interchange and imposing anti-competitive network
cards. rules, like honor all cards.

Complexity also contributes to the problem. Interchange is The Department of Justice opened the legal floodgates
just one component of the discount fee that merchants pay when in 1998 it brought an anti-trust suit against Visa and
for accepting card payments. When merchants talk about Mastercard.
"swipe fees," what they really mean are the discount fees.
Challenging rules that prohibited member banks from
According to a report from the Federal Reserve Bank of issuing cards from competing networks, like American
St. Louis, U.S. financial institutions collected $66 billion Express and Discover. The DOJ also challenged the brand's
in interchange last year, up from $64 billion in 2024. duality rules that allowed banks to issue both Mastercard
The Merchants Payments Coalition, on the other hand, and Visa cards.
reported that merchants paid $198.25 billion in swipe
fees in 2025, up from $187.2 billion in 2024. It's difficult to The resulting decision, handed down in 2001, was a mixed
determine the accuracy of the MPC's data, but I suspect it's bag. The U.S. District Court for the Southern District of
been amped up. New York ruled that the exclusionary rules prohibiting
Mastercard and Visa banks from issuing competing cards
The merchant discount fee typically consists of: like AmEx and Discover were illegal and anticompetitive.
• Interchange, which gets paid to the card-issuing However, the court ruled that the "duality" rule was legal
bank, and is set by the card brands. Interchange can and FIs could continue issuing Mastercard- and Visa-
vary based on: branded cards.
• Card type (for example, plain vanilla, rewards or Bumps in the road for merchants' case
corporate) An initial monetary settlement in the antitrust case
• Transaction method (for example, in person chip brought by merchants against Visa and Mastercard in
reader, keyed in, or online) 2005 was reached in 2012, but was subsequently thrown
• Merchant category (for example, supermarket, out on appeal. A new monetary settlement was reached in
restaurant, or fuel station) 2019, and after four years of legal wrangling was upheld
• Network assessments, which are assessed by and paid by the Second Circuit U.S. Court of Appeals in 2023. It was
valued at $5.6 billion.
to the card networks (Visa, Mastercard, American
• May also include a small percentage of the Separately, rules changes were put forth in a 2024
transaction amount settlement agreement that would eliminate the brands'
• Processor/Acquirer Markup. It covers: honor-all-cards rule, offer surcharging flexibility and
lower interchange. Many of the nation's largest retailers
• Authorization opted out of the settlement to pursue their own cases,
• Settlement however, including Walmart, Target and Starbucks.
• Customer support

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