$1.225 Billion Discover Merchant Settlement: Are You Eligible?

A historic Discover lawsuit has reached a proposed $1.225 billion settlement, offering businesses a chance to potentially recover excessive charges resulting from alleged misclassified credit card transactions. Merchants, merchant acquirers, and payment intermediaries who processed or accepted Discover credit cards between January 1, 2007, and December 31, 2023, may be eligible—but time may be running out. 

Claims must be submitted by May 18, 2026, with a final approval hearing scheduled for May 20, 2026. This settlement addresses years of disputed interchange fees and alleged credit card overcharges that affected thousands of businesses nationwide.

Background of the Discover Merchant Lawsuit

The settlement resolves three related lawsuits:

• CAPP, Inc. v. Discover Financial Services
• Lemmo’s Pizzeria, LLC v. Discover Financial Services
• Support Animal Holdings, LLC v. Discover Financial Services

These cases were filed in the U.S. District Court for the Northern District of Illinois. 

Plaintiffs claimed that Discover Financial Services, DFS Services LLC, and Discover Bank (collectively, “Discover”) misclassified consumer credit cards as commercial credit cards, causing businesses to incur excessive interchange fees. 

Discover disputes these allegations, and the court has not ruled on liability. The parties reached this settlement to avoid the costs and uncertainties of litigation.

According to federal regulators, approximately 98% of nearly 5 million cards classified as commercial were actually consumer cards, which resulted in over $1.2 billion in unnecessary business card charges. Consumer cards usually carry an interchange rate of approximately 1.4%, while commercial cards can reach 2.4%, illustrating the scale of the alleged commercial card misclassification.

Settlement Overview

As per the official notice, the Discover merchant settlement offers a historic payout ranging from $540 million to $1.225 billion, depending on claim volume. Eligible businesses are guaranteed a minimum payment of $10, with actual amounts calculated based on the interchange fees overcharged during the covered period. 

In addition to financial compensation, the settlement includes regulatory oversight to ensure better practices in credit card processing and prevent future payment processing claims related to misclassified cards.

Who Is Eligible?

The eligibility for this class action is broad, encompassing:

• End merchants: Businesses that directly accepted Discover credit cards; subcategories include indirect end merchants, managed active direct end merchants, unmanaged active direct end merchants, and inactive direct end merchants.
• Merchant acquirers: Companies that facilitate Discover card transactions for other businesses
• Payment Intermediaries: Businesses like PayPal, Stripe, or Square that processed Discover credit cards on behalf of others but are neither End Merchants nor Merchant Acquirers

Eligibility covers transactions between January 1, 2007, and December 31, 2023, and generally applies to entities affected by interchange rate disputes, credit card overcharges, and POS transaction fees due to misclassification. Certain individuals or entities listed in the settlement agreement are excluded.

How to File a Claim

To receive a payment under the settlement:

Submit Required Information

• Payment intermediaries must forward payment intermediary information by February 25, 2026.
• Merchant acquirers should submit additional acquirer information by November 12, 2025.
• End merchants should provide the necessary details as outlined in the notice, which are outlined in questions 8–13. 

Submit a Claim Form

All claims must be postmarked or submitted online by May 18, 2026. Claim forms are available on the official settlement website.

Businesses may be associated with multiple Claimant IDs or Discover merchant identifiers (MIDs), so it’s important to link all accounts for full settlement eligibility. If your business falls under more than one settlement class type, separate submissions may be required to ensure full payment.

Court Approval and Legal Process

The court granted preliminary approval on July 30, 2025, and notices began to be distributed on September 11, 2025. The final approval hearing is set for May 20, 2026, at the U.S. District Court for the Northern District of Illinois. The court will also consider attorneys’ fees (up to $25 million), reimbursement of litigation costs (up to $1 million), and service awards of up to $7,500 for each of the five class representatives. These payments come separately from settlement distributions to eligible merchants.

This step is critical for businesses, as the settlement will only become final once approved by the court, ensuring proper acquirer settlement and allocation of credit card overcharges.

Why This Settlement Matters

The Discover merchant settlement represents one of the largest payment processing settlements in U.S. history, with significant potential returns for businesses affected by commercial card misclassification. 

This case highlights the importance of monitoring credit card processing and reviewing agreements with payment processors. Businesses impacted by POS transaction fees or business card charges should consider participating if eligible, as the settlement provides an opportunity to recover losses and address interchange rate disputes.

Overall, businesses affected by the Discover lawsuit likely must act quickly. To be eligible for payment:

• Submit all required information to the settlement administrator.
• File your claim by May 18, 2026.
• Visit www.DiscoverMerchantSettlement.com or call 1-877-535-8067 for assistance.

Filing a claim ensures your business can participate in this historic Discover merchant settlement and recover potential payment processing claims.