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.”
The Deal at a Glance
- Revised settlement value: $38 billion
- Merchants affected: more than 12 million
- Swipe fees cut by 0.1 percentage points over five years
- Standard consumer-card rates capped at 1.25% for eight years
- The mandatory “Honor All Cards” rule is eliminated
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.
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.
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.
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.
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.
