A federal judge granted preliminary approval to Visa and Mastercard’s revised $38 billion settlement with merchants on Tuesday, marking a major step in a legal battle over credit card swipe fees that has lasted more than two decades. U.S. District Judge Brian Cogan in Brooklyn, New York, said the settlement covering more than 12 million merchants was “fair, reasonable, and adequate,” and signaled he was likely to grant final approval later in 2026.
The settlement, announced in November 2025, requires Visa and Mastercard to lower swipe fees by 0.1 percentage point for five years and cap standard consumer credit card rates at no more than 1.25% for eight years. Merchants will also gain the ability to choose whether to accept specific card categories—commercial cards, premium consumer cards including rewards cards, and standard consumer cards—effectively ending the longstanding “Honor All Cards” rule that required acceptance of all cards or none.
The litigation began in 2005 when merchants sued Visa and Mastercard, alleging the card networks violated federal antitrust laws by jointly setting interchange fees at excessive levels. Swipe fees, also called interchange 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, according to the Merchants Payments Coalition. The average fee was 2.36%.
This settlement replaces an earlier $30 billion accord that Judge Margo Brodie rejected in June 2024, ruling that fees would have remained above competitive levels and merchants would still be stuck with the “Honor All Cards” rule. The revised deal increases the settlement amount and strengthens merchant protections, addressing the judge’s prior concerns.
Despite the court approval, major retail groups including the National Retail Federation and the National Association of Convenience Stores said the settlement failed to address a “broken” credit card market and plan to file further objections. Opponents argued merchants would still pay too much to accept rewards cards. Judge Cogan acknowledged that objectors had identified provisions they wanted but couldn’t achieve, yet concluded the settlement represented the best possible outcome given the risks and costs of continued litigation.
Two economists hired by the plaintiffs, Nobel Prize winner Joseph Stiglitz and University of Washington professor Keith Leffler, said the changes could save merchants $38 billion by 2031 and provide $224 billion in benefits overall, including to consumers. Visa and Mastercard stocks rose on the news, with Visa shares climbing 1.7% and Mastercard shares rising 2% on Tuesday. The card networks welcomed the ruling, with Mastercard calling it a “fair resolution” that gave businesses more flexibility in managing card transactions.
Sources
- Reuters — Judge’s preliminary approval ruling, settlement terms, fee reductions, “Honor All Cards” rule change, litigation history dating to 2005, swipe fee totals for 2024-2025, prior $30 billion settlement rejection, economist analysis by Stiglitz and Leffler, stock market reaction
- Payments Dive — Court approval, settlement fairness ruling, merchant coverage details
- The Journal Record — Preliminary approval announcement, settlement revision from $30 billion to $38 billion
- Massachusetts Lawyers Weekly — Fee reduction terms, consumer rate caps, card category selection provisions
- Merchants Payments Coalition — Historical swipe fee data and growth statistics
