Judge Preliminarily Approves $38 Billion Visa–Mastercard Swipe-Fee Settlement

Visa and Mastercard have cleared a major hurdle in their long-running fight with American retailers. On Tuesday, a federal judge granted preliminary approval to a revised $38 billion settlement aimed at resolving merchant complaints over the fees they pay every time a customer swipes a card.

The agreement covers more than 12 million merchants. U.S. District Judge Brian M. Cogan signalled that he expects to grant final approval down the line, describing the terms as “fair, reasonable, and adequate.”

Two Decades in the Making

The settlement, first announced in November, brings to a head a legal battle that dates back to 2005. Merchants accused Visa, Mastercard, and a group of banks of conspiring to violate antitrust law through the way they set and collected interchange fees — the charges levied on businesses for processing card payments.

The first complaints were filed in May 2005, and the Judicial Panel on Multidistrict Litigation later sent them to the U.S. District Court for the Eastern District of New York in Brooklyn, where they were combined under the docket known as MDL 1720. Beyond the fee-setting itself, the merchants attacked the networks’ no-surcharge and honor-all-cards rules. Interchange is the largest single slice of what a business pays to take a card, and in the United States it has averaged roughly 2% of the transaction value.

The case has already produced one reversal. A 2012 class settlement, for which Visa alone put about $4 billion into court-supervised accounts, was thrown out by the U.S. Court of Appeals for the Second Circuit on 30 June 2016. On remand the merchants were split into two groups. A Damages Class seeking money agreed a revised deal in September 2018 that added $900 million from the defendants; it won final approval in December 2019 and was upheld on appeal in March 2023. An Injunctive Relief Class, which sought changes to the rules and fees rather than cash, was certified in September 2021 without the right to opt out. It covers every merchant that has accepted Visa or Mastercard cards in the United States since 18 December 2020, and it is this group that the new agreement resolves.

Under the new terms, swipe fees would fall by 0.1 percentage points over a five-year period, while rates on standard consumer cards would be capped at 1.25% for eight years.

Visa’s own summary, filed with the Securities and Exchange Commission on the day the deal was signed, describes the fee cut as a 10-basis-point reduction in the combined average effective U.S. credit interchange rate and adds that posted U.S. credit interchange rates will be capped for five years. The package also creates an education programme to help merchants of all sizes understand card acceptance and manage their costs.

What Changes for Merchants

One of the most significant shifts is the removal of the “Honor All Cards” mandate. Until now, accepting one Visa or Mastercard product effectively meant accepting them all. The revised deal lets merchants pick and choose between card categories — commercial, premium consumer, or standard consumer — rather than taking everything or nothing. Businesses also gain broader freedom to add surcharges.

The surcharging change is specific: according to Visa’s filing, a merchant will be able to add a fee to Visa credit transactions even if it does not do the same for other credit networks. For retailers, the practical effect is more leverage at the checkout, since premium rewards cards carry higher interchange than standard ones and can now be treated differently.

Investors reacted positively to the ruling. Visa shares rose 1.7% on Tuesday, while Mastercard climbed 2%.

A Second Attempt After an Earlier Rejection

This is not the first version of the agreement to reach a courtroom. In June 2024, Judge Margo Brodie threw out an earlier $30 billion proposal, concluding that it would not bring swipe fees down to pre-violation levels and that the mandatory acceptance rule would simply carry on.

That earlier deal was signed on 25 March 2024, in the middle of a run of summary judgment rulings, issued between January and April of that year, that trimmed some of the claims. The request for preliminary approval was denied on 25 June 2024. The networks went back to the table, and Judge Cogan took over the long-running case in September 2025, two months before the superseding agreement was signed on 10 November.

Retailers Still Aren’t Satisfied

Opposition has not gone away. The National Retail Federation and the National Association of Convenience Stores — with Walmart among the objectors — argued that the payment-card market remains “broken,” and warned that merchants will keep overpaying to accept rewards cards.

Judge Cogan acknowledged that the objections raised legitimate points, but stressed that a settlement does not have to be “the best possible recovery” — only better than what merchants could realistically expect to win by pressing on with litigation.

The fight is also continuing on other fronts. On 21 April 2026, Potayto-Potahto, LLC and two other merchants filed a class action in the Southern District of New York seeking damages on behalf of businesses that have accepted Visa or Mastercard credit cards since 25 January 2019. On the same day, three merchants belonging to the damages class asked the MDL court to declare that the forward-looking release in the 2018 damages settlement is invalid under federal law.

Merchants that opted out of that damages settlement have largely struck their own deals instead. In its quarterly report filed at the end of April 2026, Visa said it had settled with merchants accounting for about 94% of the Visa card sales volume of those opt-outs, and that every individual merchant case due to go to trial in April 2026 in the Southern District of New York had been resolved.

Wider Pressure on the Card Networks

The merchant litigation is not the only legal challenge Visa faces over its fees. On 24 September 2024 the U.S. Department of Justice sued the company in Manhattan federal court, alleging that it has monopolised debit network services in the United States through agreements with merchants, acquirers and others. A judge denied Visa’s motion to dismiss that case on 23 June 2025.

Outside the United States, regulators have gone further than any negotiated settlement. Under a 2015 regulation, the European Union caps interchange on consumer cards at 0.3% for credit and 0.2% for debit, and in June 2025 the UK Competition Appeal Tribunal found that certain Visa interchange rates restrict competition, a decision Visa is seeking to appeal.

Preliminary approval is not the end of the road. The agreement Visa filed in November states that it is subject to the court’s approval, so a final ruling from Judge Cogan is still needed before the new rules can take effect.