A federal judge has given preliminary approval to a revised $38 billion settlement resolving claims that Visa and Mastercard overcharged millions of merchants for credit card processing fees. U.S. District Judge Brian Cogan in Brooklyn found the agreement, which covers over 12 million businesses, to be “fair, reasonable, and adequate,” signaling that final approval is likely.
Landmark Settlement Moves Forward
This development marks a significant step in a legal battle that began in 2005. Merchants initially accused the card networks and various banks of antitrust violations through the collection of what are commonly known as “swipe fees” or interchange fees. The latest settlement, announced in November, addresses these long-standing grievances after a previous $30 billion proposal was rejected by a different judge nearly two years ago for being insufficient.
The total swipe fees collected by Visa and Mastercard in the U.S. reached $118.8 billion in 2025, an increase from $111.2 billion in 2024 and significantly up from $25.6 billion in 2009, according to data from the Merchants Payments Coalition. The average fee had been around 2.36%.
Key Provisions of the Agreement
Under the terms of the new settlement, Visa and Mastercard have agreed to reduce swipe fees by 0.1 percentage point for a period of five years. Additionally, standard consumer credit card rates will be capped at no more than 1.25% for eight years. A notable change allows merchants to choose whether to accept different categories of cards, including commercial cards, premium consumer cards (such as rewards cards), and standard consumer cards. This provision would effectively dismantle the “Honor All Cards” rule, which previously mandated that merchants accept all Visa and Mastercard cards or none at all. Merchants will also gain more flexibility in imposing surcharges on customers.
Continued Opposition and Future Outlook
Despite the judge’s preliminary approval, some prominent retail organizations, including the National Retail Federation, the world’s largest retail trade group, and the National Association of Convenience Stores (NACS), have voiced continued opposition. These groups argue that the revised settlement still fails to adequately address fundamental issues within the credit card market. NACS General Counsel Doug Kantor anticipates numerous further objections to be filed.
Objectors contend that merchants will continue to bear excessive costs, particularly for accepting rewards cards, and will still be compelled to “honor all issuers” within a given network, preventing them from selectively accepting or rejecting cards from specific banks. Judge Cogan acknowledged that many of the objectors’ concerns have merit but emphasized that the settlement’s effectiveness is measured against what can be achieved through trial, not against an ideal outcome.
Prominent objectors also include retail giant Walmart and the Merchants Payments Coalition. Neither entity provided immediate comment following the ruling.
Industry Reactions and Potential Consumer Benefits
The card networks have responded positively to the judge’s decision. Visa stated that the settlement offers merchants increased flexibility in payment acceptance, while Mastercard described the accord as a balanced resolution for all stakeholders.
Supporters of the settlement include the Electronic Payments Coalition, whose membership comprises card networks and major financial institutions like Bank of America, Capital One, Chase, and Citibank. Experts hired by the plaintiffs, including Nobel Prize-winning economist Joseph Stiglitz and University of Washington professor Keith Leffler, have projected that the changes could save merchants approximately $38 billion by 2031 and deliver overall benefits totaling $224 billion, which would likely extend to consumers.
The previous $30 billion settlement, rejected in June 2024, would have only reduced swipe fees by 0.07 percentage point over five years and offered more limited surcharge options. At the time of its rejection, U.S. District Judge Margo Brodie noted that fees would have remained elevated and merchants would have been bound by the “Honor All Cards” rule.
