Operations
With 85% of cards today tied to rewards programs, almost all would fall under the new ‘premium consumer’ category, leaving restaurants with virtually no choice but to continue accepting high-fee cards, according to the National Restaurant Association.
Photo: Gemini
November 13, 2025 by Cherryh Cansler — Editor, FastCasual.com
The proposed $200 billion settlement aimed at resolving the long-running antitrust lawsuit over Visa and Mastercard credit card swipe fees has drawn sharp criticism from industry groups, including the National Restaurant Association, the National Retail Federation and the National Association of Convenience Stores. All agree the deal provides negligible relief and fails to address soaring operational costs for restaurant operators.
The ruling, which if approved includes a temporary reduction in interchange fees and changes to the networks’ controversial “Honor All Cards” rule, is “all window dressing and no substance,” said Sean Kennedy, EVP of public affairs with the National Restaurant Association. Fast casual and quick-service establishments are particularly affected, as credit card transaction fees often rank as one of their highest operating costs, second only to labor.
“It offers token, temporary ‘relief’ while locking in legal protections for Visa and Mastercard, ” Kennedy said in an email interview with FastCasual. “That’s why we’ll continue to push for the Credit Card Competition Act, the only solution that injects real competition into the system and brings down swipe fees for Main Street businesses and their customers.”
This is the third attempt to settle the case, and the card industry either just doesn’t get it or just doesn’t care, according to NRF Chief Administrative Officer and General Counsel Stephanie Martz.
“This proposal is all window dressing and no substance,” she said in a press release. “The reduction in swipe fees doesn’t begin to go far enough, and the change in the honor-all-cards rule would accomplish nothing. If the courts can’t fix this, it’s time for Congress to take action.”
No one should be fooled by the credit card industry’s smoke and mirrors, according to NACS Senior Vice President of Government Relations Lyle Beckwith, who said approving it would contradict the ruling that Brooklyn Judge Margo Brodie made last year when a similar solution was proposed and rejected.
“This proposed settlement endorses business as usual, including by letting Visa and Mastercard increase their own fees without any restraints,” Beckwith said in a press release. “That could erase the benefits that this settlement pretends to provide To be clear, these settlements have been agreed to by class-action attorneys who stand to make millions by agreeing to a flawed settlement…not by the retailers — or consumers — who have been at the mercy of the credit card industry for years. This proposed ‘settlement’ does nothing to stop their predatory and collusive behavior.”
Flexibility vs. reality: The ‘Honor All Cards’ dilemma
A key provision of the settlement offers merchants the ability to refuse high-fee credit cards by classifying them into three tiers: commercial, premium consumer and standard consumer. This effectively ends the networks’ long-standing “Honor All Cards” rule, which previously forced businesses to accept every card from a network if they accepted one.
However, NRA, NACS and NRF officials argue this flexibility is impractical for an industry where speed and customer experience are paramount.
“The proposed settlement does nothing to meaningfully reform the ‘Honor All Cards’ rule, one of the most anti-competitive aspects of the current payments system,” Kennedy said. “With 85% of cards today tied to rewards programs, almost all would fall under the new ‘premium consumer’ category, leaving restaurants with virtually no choice but to continue accepting high-fee cards.”
For a fast casual operator, attempting to refuse a customer’s rewards card — the primary source of high fees — creates an immediate risk of losing the sale or generating checkout friction. The association warned the rule change merely creates checkout confusion without real cost relief. Worse, the settlement allows card networks to reclassify card types at will, undermining the promised ability to be selective.
The NRF said the honor-all-cards rule violates antitrust laws. It has long argued that centrally setting swipe fee rates and restricting processing to Visa and Mastercard’s own networks has contributed to soaring increases in swipe fees. Swipe fees for Visa and Mastercard credit cards alone quadrupled from 2010 to $111.2 billion in 2024, and total credit and debit card fees reached a record $187.2 billion last year.
The fees are most retailers’ highest operating cost after labor and drive up consumer prices by nearly $1,200 a year, according to the NRF.
Miniscule fee reduction
The financial relief offered in the settlement also falls flat, Kennedy said, pointing out that the deal proposes a temporary reduction in the average interchange fee of just 0.1 percentage point over five years. This small cut is meant to offset the record $187.2 billion in total credit and debit card swipe fees U.S. businesses faced last year.
“It’s remarkable that anyone could think a temporary 10-basis-point reduction — barely more than last year’s increase — is fair compensation for allowing a credit card duopoly to maintain its grip for eight more years,” said Kennedy, noting restaurants typically operate on tight pre-tax profit margins of 3% to 5%.
The NACS and NRF, agree that it provided a “miniscule reduction” that barely rolls back the previous year’s fee increase is insufficient to provide the financial cushion needed to stabilize menu prices in the face of persistent inflation.
Undermining Congressional competition
The industry’s final concern is the settlement’s potential impact on legislative efforts.
Major trade groups are actively pushing for the passage of the bipartisan Credit Card Competition Act in Congress. The CCCA would inject true competition by requiring the largest banks to enable at least two unaffiliated networks — not just Visa and Mastercard — to process credit card transactions, according to the NRA.
The NRA fears the court settlement — which is seen as providing “legal protection” for the card networks — will be misinterpreted by lawmakers as a sufficient fix, thereby draining the urgency needed for Congress to pass the Credit Card Competition Act, which is supported by nearly 2,000 companies and 300 trade associations, as well as a broad group of consumer, labor and pro-competition organizations.
Under the bill, the nation’s largest banks would enable cards to be processed over at least one unaffiliated network like Star, NYCE or Shazam in addition to Visa or Mastercard, according to the NRF.
“Doing so is expected to result in competition that would save merchants and consumers $17 billion a year,” Martz said.
Judge Brodie will rule on the settlement, but a final approval timeline has not been set.
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