Litigation & Regulation

The card industry is no stranger to litigation, most of which pertains to the fees related to card acceptance. Government regulation is another factor that can impact the fees. There is no end in sight as cases drag on, new lawsuits are filed, and new bills are introduced. Some notable cases and news stories are referenced below.

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U.S. Surcharging Era 

Two factors affect whether merchants can impose a surcharge for card payments: state laws and network rules. 

Supreme Court Case Pertaining to a NY State Law

On Tuesday, January 10, 2017, the U.S. Supreme Court heard arguments for the appeal initiated by a group of New York merchants who claim New York’s “no surcharge” law violates their First Amendment free speech rights. The case is Expressions Hair Design v. Schneiderman.

On Wednesday, March 29, 2017, the U.S. Supreme Court unanimously decided New York’s “no surcharge” law does regulate speech because it regulates the communication of prices. Regarding whether such regulation violates the First Amendment is a separate matter, which they are sending it back to the Court of Appeals to analyze. See more on the Surcharge News webpage.

Network Rules Changed in Conjunction with Lawsuit Settlement  

On December 13, 2013, the U.S. District Court for the Eastern District of New York granted final approval of the interchange lawsuit settlement involving Mastercard, Visa and some banks. The initial settlement had occurred in July 2012 and, as one result, Mastercard and Visa began to allow surcharging in the United States in January of 2013.  

Settlement Negated

Responding to a merchants’ appeal of the settlement, on June 30, 2016, a federal appeals court ruled in favor of merchants, thereby negating the settlement finalized at the end of 2013. On March 27, 2017, the U.S. Supreme Court declined to hear a bid by merchants to essentially reopen the original interchange lawsuit settlement, so the June 2016 ruling stands.

New Settlement Looms

On January 24, 2019, preliminary approval of a new settlement—in excess of $6B—filed on September 18, 2018, was granted. Visit the official website for details.


  • Initial settlement of interchange lawsuit in 2012

  • Final approval of the settlement at the end of 2013, followed by an appeal by merchants

  • A ruling favored merchants; original settlement negated in 2016

  • U.S. Supreme Court declines to get involved in 2017; back to square one (negated settlement)

  • In January 2019, preliminary approval of a new settlement was granted

Who wins and who loses money in the ongoing industry battles stemming from litigation and government intervention?

Who wins and who loses money in the ongoing industry battles stemming from litigation and government intervention?

American Express vs. the U.S. Department of Justice

American Express Retains Right to Enforce Rule

In September 2016, the 2nd U.S. Circuit Court of Appeals in New York solidified the ability for American Express to enforce its rule that prohibits merchants from steering customers toward other payment cards. In its ruling, the court considered the satisfaction of American Express cardholders (e.g., their desire to earn rewards from card usage), saying the lower court only looked at the merchant side of the picture in 2015. 

The case made its way to the U.S. Supreme Court, who sided with American Express by ruling in June 2018 that the rule does not violate anti-trust laws. 

American Express Won Appeal in 2015

American Express received some good news in December 2015 when the 2nd U.S. Circuit Court of Appeals ruled the card network could temporarily resume prohibiting merchants from steering customers toward other payment cards. A permanent ruling depended on the 2nd Circuit’s future decision on the American Express appeal (of an April 2015 order by Judge Garaufis in Brooklyn federal court, which followed his February decision that American Express merchant rules harmed competition and violated U.S. antitrust laws). 

Initial 2015 Ruling Favored Merchants

The February 2015 court ruling favored merchants, allowing them to steer customers away from paying via American Express and toward payment cards with lower acceptance costs. The case is U.S. v. American Express Co., 1:10-cv-04496, U.S. District Court, Eastern District of New York (Brooklyn). PaymentsSource published an informative article on this; American Express issued a press release relaying that they planned to appeal. See also a related blog post.

Interchange Regulation in the European Union

In 2015, the European Council adopted interchange regulation (caps) for consumer debit and credit cards. For more information, resources include: a May 2015 summary by Cooley LLP and an April 2015 press release by the European Council.

U.S. Debit Interchange Regulation  


A battle ensued ever since the Federal Reserve was directed by Congress to cap debit interchange rates in 2011 as a result of the Durbin Amendment to the 2010 Dodd-Frank Act. Merchant groups, including the National Association of Convenience Stores (NACS), filed a lawsuit, arguing about the Fed’s interpretation of the Durbin Amendment that resulted in rates merchants felt were still too high. 

While debit interchange does not impact Commercial Cards, it does impact banks (card issuers) since interchange is a source of their revenue. Anything that impacts bank revenue could, at some point, have a ripple effect that reaches Commercial Cards. 

2014 Ruling Favors the Fed

On Friday, March 21, 2014, in the case of NACS, et. al. v. Board of Governors of the Federal Reserve System, the U.S. Court of Appeals for the District of Columbia Circuit ruled in favor of the Federal Reserve, overturning a July 21, 2013, court ruling. This meant that debit interchange would remain as-is (the rates that went into effect October 1, 2011) unless overruled by the Supreme Court. See coverage from the law firm Sutherland Asbill & Brennan LLP.

2015 News Upholds Rates Set by Fed

On January 20, 2015, the U.S. Supreme Court declined to hear this case, thereby keeping the March 2014 ruling intact. Meanwhile, merchants plan to continue fighting for lower card acceptance fees.

Impact of the Durbin Amendment 

It is not surprising that there are opposing views on how the Durbin Amendment and debit interchange regulation has impacted the public. On the third anniversary (October 1, 2014), the Electronic Payments Coalition reported that 94% of consumers have not seen any savings. Further, an opinion article published by Forbes suggests repealing the Durbin Amendment, raising some interesting points. In contrast, American Banker published How Fed Policy on Swipe Fees Quashes Market Forces.

Groundbreaking Bill Introduced but Failed in Colorado

As reported by on February 9, 2015, House bill 15-1154, introduced in January 2015, would have prevented Colorado suppliers from paying interchange on the tax portion of a card transaction. Today, the fee is applied to the total transaction amount. In March 2015, the Colorado House Committee on Finance postponed this indefinitely. Basically, the bill failed.