Discover $1.225B Merchant Interchange Fees Settlement

Merchants who accepted or processed Discover credit cards between 2007 and 2023 may qualify to claim a cash payment from a class action settlement.

Discover Financial Services, DFS Services LLC and Discover Bank (collectively, Discover) agreed to pay up to $1.225 billion to settle a class action lawsuit. The lawsuit alleged Discover misclassified certain consumer credit cards as commercial credit cards, resulting in merchants and other entities paying excessive interchange fees.

Who can file a claim?

The settlement class includes a wide range of businesses and entities that processed or accepted Discover credit cards during the relevant period:

• End merchants: Individuals or businesses that accepted a Discover-issued credit card directly from a customer as payment for goods or services between Jan. 1, 2007 and Dec. 31, 2023. There are four types of end merchants:
• Indirect end merchants (most merchants fall into this group)
• Inactive direct end merchants
• Managed active direct end merchants
• Unmanaged active direct end merchants

• Merchant acquirers: Businesses that had an agreement with Discover to facilitate credit card transactions that Discover classified as an "acquirer" during the relevant period.
• Payment intermediaries: Entities that processed Discover credit card transactions on behalf of other businesses but that Discover did not classify as end merchants or merchant acquirers.

How much is the Discover payout?

The amount each class member receives depends on several factors, including:

• The total estimated interchange fee overcharge for each Discover merchant identifier associated with the class member's business (the “MID amount”)
• How the settlement allocates interchange fee charges for each MID among the merchant acquirer (if any), payment intermediaries (if any) and end merchant associated with the same MID
• The total aggregate dollar amount of all settlement payments

Eligible class members will receive a minimum payment of $10. The total payout to all class members will be at least $540 million and may reach up to $1.225 billion plus interest. If the total of all payments is less than $540 million, the settlement administrator will increase each payment proportionally. If the total exceeds $1.23 billion, it will reduce payments proportionally.

How to claim an award

Most class members must file a claim to receive a payment. The following do not need to submit a claim form:

• Unmanaged active direct end merchants will automatically receive payment unless the settlement administrator contacts them for further information.
• Managed active direct end merchants only need to provide payment information to the settlement administrator by returning the payment information form they received with their notice.

All other class members can submit claims via the online claim form or download, print and co plete the PDF claim form and mail it to the settlement administrator.

Settlement administrator's mailing address: Discover Card Merchant Settlement Administrator, PO Box 2497, Portland OR 97208-2497

Class members that did not receive a notice but believe they are eligible may still file a claim.

Is proof/documentation required to submit a claim?

Claimants must provide sufficient information to demonstrate their eligibility. For most, this includes basic business details, such as the business's legal name, d/b/a (if any) and taxpayer identification number. Some claimants may be required to submit an IRS Form W-9 or additional documentation if the settlement administrator requests it.

Payout options

• Paper check
• ACH payment to a designated U.S. bank account

$1.225 billion settlement fund breakdown

Discover agreed to pay at least $540,000,000 with a cap at 1,225,000,000 plus interest.

• Settlement administration costs: To be determined
• Attorneys' fees: Up to $25,000,000
• Attorneys' expenses: Up to $1,000,000
• Service awards to class representatives: Up to $7,500 each
• Payments to eligible class members: Up to $50,000,000

Important dates

• Deadline to opt out: March 25, 2026
• Deadline to file a claim: May 18, 2026
• Fairness hearing: May 20, 2026

When is the Discover merchant settlement payout date?

The settlement administrator will issue payments approximately 240 days after the court grants final approval to the settlement.

Why is there a class action settlement?

The class action lawsuits alleged Discover misclassified certain consumer credit cards as commercial cards, causing merchants and others to pay higher interchange fees.

Discover denies any wrongdoing but agreed to settle to avoid the expense, uncertainty and risks of continued litigation.

Sources

1. Class notice
2. Settlement agreement
3. Claim form
4. Settlement FAQ