NEW YORK — A federal judge has granted preliminary approval to a revised $38 billion antitrust settlement between Visa and Mastercard and millions of merchants, moving a long-running dispute over credit card processing fees closer to resolution.
U.S. District Judge Brian Cogan of the Eastern District of New York ruled Tuesday that the proposed agreement covering more than 12 million merchants is “fair, reasonable, and adequate,” and indicated he is likely to grant final approval at a later date, Reuters reported.
The settlement, announced in November, is the latest attempt to resolve litigation that dates to 2005. Merchants accused Visa and Mastercard of conspiring with banks to violate antitrust laws through the assessment of excessive interchange fees, commonly known as swipe fees, according to Reuters.
Earlier Settlement Rejected
The judge’s ruling comes nearly two years after a separate federal judge rejected an earlier $30 billion settlement, finding it did not go far enough in addressing merchants’ concerns.
Under the revised agreement, Visa and Mastercard would reduce swipe fees by 0.1 percentage point for five years. Standard consumer card rates also would be capped at no more than 1.25% for eight years, Reuters reported.
The settlement also would provide merchants with greater flexibility in determining which categories of cards to accept, including commercial cards, premium consumer cards and standard consumer cards. The provision would effectively eliminate the longstanding “Honor All Cards” rule, which required merchants to accept all Visa or Mastercard-branded cards if they accepted any card on those networks.
Merchants would also gain expanded authority to impose surcharges on customers who use credit cards.
$118 Billion in Fees During 2025
According to the Merchants Payments Coalition, Visa and Mastercard interchange fees totaled $118.8 billion in the United States in 2025, up from $111.2 billion in 2024 and $25.6 billion in 2009. The average swipe fee reached 2.36%, Reuters reported.
Despite the preliminary approval, opposition remains.
The National Retail Federation and the National Association of Convenience Stores criticized the revised settlement, arguing it fails to address structural problems in the credit card market. NACS General Counsel Doug Kantor said he expects “many more objections” to be filed, according to Reuters.
Objectors contend merchants would continue to face excessive fees on rewards cards and still would be required to accept all cards issued within a particular network, preventing them from accepting cards from one issuing bank while rejecting those from another.
In his ruling, Cogan acknowledged that some objections had merit but said the legal standard was not whether the settlement represented the best possible outcome.
‘The Question’
“The question is not whether the amended settlement constitutes the best possible recovery,” Cogan wrote, according to Reuters. “It’s whether the amended settlement constitutes the best possible recovery in light of what can be gained and lost through trial.”
Other opponents include Walmart and the Merchants Payments Coalition.
Visa and Mastercard welcomed the court’s decision. Visa said the settlement would provide merchants with additional payment acceptance flexibility, while Mastercard said the agreement balances the interests of all parties, Reuters reported.
Supporters include the Electronic Payments Coalition, whose members include the card networks and major issuers such as Bank of America, Capital One, JPMorgan Chase and Citigroup.
Two Economists Weigh In
Two economists retained by the plaintiffs — Nobel Prize-winning economist Joseph Stiglitz and Keith Leffler — estimated the revised agreement could save merchants $38 billion through 2031 and generate $224 billion in overall benefits, including benefits to consumers, according to Reuters.
The earlier $30 billion settlement would have reduced swipe fees by 0.07 percentage point over five years and expanded surcharge options. In rejecting that proposal in 2024, U.S. District Judge Margo Brodie said fees would still remain above levels that might have existed absent antitrust violations and that merchants would remain bound by the “Honor All Cards” rule, Reuters reported.
