A U.S. federal judge on Tuesday granted preliminary approval to a revised $38 billion settlement reached between Visa and Mastercard and a group of merchants who accused the card networks and banks of charging excessive fees for credit card transactions.
U.S. District Judge Brian Cogan, sitting in Brooklyn, New York, concluded that the proposed settlement met the standards of being fair, reasonable, and adequate at this stage of court review. The agreement, announced in November, is intended to resolve litigation that traces back to 2005, when merchants first brought claims alleging that Visa, Mastercard and various banks conspired in ways that violated U.S. antitrust laws through the collection of so-called swipe fees.
The decision to grant preliminary approval follows an earlier judicial rebuff of a proposed $30 billion settlement, which a different judge had deemed insufficient. That prior rejection occurred nearly two years before the revised $38 billion proposal now under preliminary review.
Despite the court's initial endorsement, the revised settlement has attracted criticism from several merchant trade organizations. The National Retail Federation, the Merchants Payments Coalition and the National Association of Convenience Stores are among the groups that have publicly opposed the terms. Those organizations argue the agreement would put merchants in a difficult position: either pay what they characterize as excessive fees to continue accepting popular rewards cards that have a dominant market presence, or refuse those cards and risk losing sales and revenue.
The settlement is structured to resolve long-running litigation over interchange or swipe fees, but the preliminary nature of the approval signals further procedural steps remain before any final resolution. The court's finding of fairness and adequacy at this stage permits notice and other procedural requirements to move forward under the settlement framework.
Context and next steps
- The settlement addresses claims dating to 2005 concerning alleged antitrust conduct by card networks and banks in relation to swipe fees.
- A previous $30 billion proposal was rejected by a different judge as inadequate nearly two years earlier.
- Several major merchant trade groups oppose the revised agreement, citing potential negative impacts on merchants' acceptance choices and revenues.