A U.S. district judge in Brooklyn on June 9 gave preliminary approval to a revised $38 billion settlement between merchants and the card networks Visa and Mastercard that aims to end litigation dating back to 2005.
U.S. District Judge Brian Cogan approved the revised agreement nearly two years after a separate judge rejected a proposed $30 billion settlement as insufficient. The case began with merchants accusing Visa, Mastercard and issuing banks of conspiring to violate U.S. antitrust laws through the collection of interchange fees commonly known as swipe fees.
Terms of the revised settlement
The settlement announced in November would reduce swipe fees by 0.1 percentage point for a five-year period. It also caps standard consumer card rates at no more than 1.25% for eight years. In addition, the agreement would give merchants expanded options to add surcharges to customers and the ability to accept or reject categories of cards.
Those card categories identified in the settlement include commercial cards, premium consumer cards - a group that includes many rewards cards - and standard consumer cards. Supporters contend this structure would eliminate the so-called "Honor All Cards" rule, which historically required merchants to accept all Visa and Mastercard cards or none.
Support and opposition
- Opposition has come from several trade organizations including the National Retail Federation, the Merchants Payments Coalition, and the National Association of Convenience Stores. Major retailers including Walmart also objected to the revised pact.
- Critics argue the settlement forces merchants into a difficult choice: either absorb higher costs to accept popular rewards cards that dominate consumer spending, or forgo accepting those cards and risk losing sales. Walmart characterized the deal as a "gift" to Visa and Mastercard, saying it allows the networks to entrench anticompetitive practices that have persisted for more than 30 years without fear of challenge by large national merchants.
- Supporters include the Electronic Payments Coalition, whose members include the card networks and large issuers such as Bank of America, Capital One, Chase and Citibank.
Expert assessments and financial figures
Two experts retained by the plaintiffs - Nobel Prize-winning economist Joseph Stiglitz and University of Washington professor Keith Leffler - estimated that the settlement's changes could save merchants $38 billion by 2031 and generate $224 billion in total benefits, including gains that would reach consumers.
Data cited by the Merchants Payments Coalition show that swipe fees for Visa and Mastercard in the United States reached $118.8 billion in 2025, up from $111.2 billion in 2024 and $25.6 billion in 2009. The organization reported the average fee was 2.36%.
History of the litigation and prior rejection
The larger legal fight began in 2005 with allegations that card networks and issuing banks conspired to fix fees and terms. In June 2024, U.S. District Judge Margo Brodie rejected an earlier $30 billion settlement, concluding it was too small and would leave interchange fees higher than they would have been without any antitrust violations. Judge Brodie also found that the earlier agreement effectively left merchants bound by the "Honor All Cards" rule.
The earlier $30 billion proposal had called for a 0.07 percentage point reduction in swipe fees over five years and would have allowed expanded surcharging options. Opponents at that time described the proposed changes as illusory because merchants would still have to "honor all issuers" within a given network - for example, they could not accept cards from one bank while rejecting cards from another under the same network.
Current status and next steps
The preliminary approval by Judge Cogan clears a procedural hurdle but does not finalize the settlement. Several trade groups and large merchants continue to object, citing concerns about the settlement's practical impact on merchants' choices and cost structures. Supporters of the pact argue it offers material savings and greater flexibility for merchants while ending lengthy litigation.
The litigation's resolution under the revised terms would mark an important legal and commercial milestone for payments industry participants, merchants and card issuers, though it remains subject to further court proceedings and any unresolved objections.