A judge has granted preliminary approval to a revised $38 billion settlement between Visa and Mastercard and millions of merchants.
The agreement aims to resolve long-standing accusations that the card networks overcharged for processing credit card payments.
U.S. District Judge Brian Cogan, based in Brooklyn, New York, deemed the settlement, which covers more than 12 million merchants, to be “fair, reasonable, and adequate.” He indicated that final approval is likely to follow.
The ruling, delivered on Tuesday, comes nearly two years after a different judge rejected a previous $30 billion proposal as insufficient.
Despite the new agreement, announced in November, some organizations, including the National Retail Federation – the world’s largest retail trade group – continue to oppose it and plan further challenges. The settlement seeks to conclude litigation that began in 2005, when merchants first accused Visa, Mastercard, and various banks of conspiring to violate US antitrust laws through the collection of “swipe fees.”
SWIPE FEES WOULD BE CUT
Also known as interchange fees, swipe fees totaled $118.8 billion for Visa and Mastercard in the United States in 2025, up from $111.2 billion in 2024 and $25.6 billion in 2009, the Merchants Payments Coalition said. The average fee was 2.36%.
Visa and Mastercard agreed to lower swipe fees by 0.1 percentage point for five years, while standard consumer rates would be lowered to no more than 1.25% for eight years.
Merchants could also choose whether to accept cards in distinct categories: commercial cards, premium consumer cards — including the popular rewards cards that dominate the card market — and standard consumer cards.
That provision would effectively end the longstanding “Honor All Cards” rule requiring merchants to accept all Visa and Mastercard cards or none. Merchants also got more options to impose surcharges on customers.
Visa shares rose 1.7% on Tuesday while Mastercard shares rose 2%.
MORE OBJECTIONS PREDICTED
In separate statements, the National Retail Federation and the National Association of Convenience Stores said the revised settlement failed to address a “broken” credit card market, and NACS General Counsel Doug Kantor predicted “many more objections” will be filed.
Objectors said merchants would still pay too much to accept rewards cards and be required to “honor all issuers” in a given network, meaning they could not accept one bank’s cards and reject another’s.
Cogan said many objections had merit, but the settlement didn’t need to be perfect.
“The objectors identify several things that they want to do but can’t (e.g., rejecting cards at the issuer-level, surcharging at the issuer-level) and that they theoretically can do but won’t (e.g., rejecting premium cards),” he said. “But the question is not whether the amended settlement constitutes the best possible recovery, end stop – it’s whether the amended settlement constitutes the best possible recovery in light of what can be gained and lost through trial.”
Other objectors included Walmart and the Merchants Payments Coalition. Neither immediately commented.
NOBEL ECONOMIST SAYS CONSUMERS COULD BENEFIT
The card networks welcomed Cogan’s decision.
Visa said the settlement gives merchants more flexibility in accepting payments, while Mastercard said the accord “balances the interests of all parties.”
Supporters of the settlement included the Electronic Payments Coalition, whose members include the card networks and large issuers such as Bank of America, Capital One, Chase and Citibank.
Two experts hired by the plaintiffs, Nobel Prize-winning economist Joseph Stiglitz and University of Washington professor Keith Leffler, said the changes could save merchants $38 billion by 2031 and provide $224 billion of benefits overall, including to consumers.
The $30 billion settlement would have lowered swipe fees by 0.07 percentage point over five years and also allowed more surcharges.
In rejecting that accord in June 2024, U.S. District Judge Margo Brodie said fees would have still been above where they were absent any antitrust violations, and merchants would remain stuck with the “Honor All Cards” rule.
