Swipe Fees Settled
U.S. Judge Approves $38 Billion Settlement Over Visa, Mastercard Swipe Fees
Key Points
U.S. District Judge Brian Cogan said the revised settlement covering more than 12 million merchants is “fair, reasonable, and adequate,” adding he was “likely” to grant final approval—signals that the court sees the deal as a workable end to the dispute rather than a compromise likely to be rejected later.
The law firm coverage emphasized the judge’s view that objectors “unlikely” to win more at trial—i.e., critics faced significant litigation risk in pursuing the case further and could end up with results that are worse than the settlement.
The articles provided key context on how large swipe-fee costs are: Visa and Mastercard swipe fees in the U.S. totaled $118.8 billion in 2025 (up from $111.2 billion in 2024 and $25.6 billion in 2009), underscoring why even “modest” percentage changes can matter in dollars.
Several outlets described how merchants currently respond to interchange charges: many small businesses either absorb the fees or pass them through as surcharges (often in the 3%–4% range) and some offer cash discounts—meaning any interchange reduction may only translate into consumer benefit if retailers choose to pass savings along.
A federal judge has granted preliminary approval to a revised $38 billion settlement between Visa, Mastercard, and roughly 12 million U.S. merchants over allegations of excessive credit card swipe fees, according to Reuters. U.S. District Judge Brian Cogan called the deal "fair, reasonable, and adequate" — a signal that final approval is likely in what has become one of the longest commercial court battles in American history.
The ruling closes in on a dispute that dates back to 2005. Visa and Mastercard swipe fees totaled $118.8 billion in 2025 alone — up from just $25.6 billion in 2009 — according to NRF. Even a modest rate cut, as this deal delivers, can move billions of dollars between card networks, banks, and merchants.
How a 21-Year Legal Fight Finally Reached a Deal
Merchants first sued Visa and Mastercard in 2005, arguing the two networks — which together control about 80% of the U.S. card market — illegally fixed the fees that merchants pay every time a customer swipes a credit card, according to Payments Dive. A 2012 settlement was thrown out. A $30 billion deal was rejected by Judge Margo Brodie in 2024, who called the projected savings "paltry." Visa and Mastercard then raised their offer to $38 billion in November 2025.
Judge Cogan took over the case and held a hearing on April 27, 2026, to hear objections from major retailers including Walmart, according to PYMNTS. He warned critics to "be careful what you wish for," noting that a trial could produce zero relief or a result worse than what is on the table now.
What the Settlement Actually Changes for Merchants
The deal cuts interchange rates — the fees merchants pay per transaction — by 0.1 percentage points for five years. Standard consumer card fees would be capped at 1.25% for eight years, according to Investing.com. The average rate in 2025 was 2.36%, so merchants would still pay well above 1% on most transactions.
The bigger structural change is the end of the "Honor All Cards" rule. Right now, if a merchant accepts Visa, it must accept every Visa card — including expensive premium rewards cards. Under the new deal, merchants can refuse high-fee rewards cards while still accepting standard ones, according to Reuters. Merchants also get more freedom to add surcharges based on card type or brand.
Big Retailers Say the Relief Is Still Too Small
The National Retail Federation called the deal a disappointment, saying it "offers no meaningful relief and leaves intact the underlying system" of network-dictated costs, according to American Banker. The group's core complaint: Visa and Mastercard still set prices for thousands of individual banks. True competition, they argue, has not been introduced.
Doug Kantor of the National Association of Convenience Stores told Payments Dive that the "vast majority of merchants" still have concerns. His group has already signaled it will appeal to the 2nd U.S. Circuit Court of Appeals if the settlement receives final approval. A final approval hearing is expected later in 2026 or early 2027.
What This Means for Consumers and Card Rewards
Whether shoppers see lower prices at the register is unclear. Nobel economist Joseph Stiglitz, an expert for the plaintiffs, argued the changes could save merchants $38 billion by 2031 and produce $224 billion in broader economic benefits, according to Reuters. But retail groups say a 0.1% fee cut is too small to trigger real price drops. Many merchants currently absorb fees or pass them on as surcharges of 3%–4%, according to The Economic Times.
Consumers using premium rewards cards could face a new problem. If merchants start refusing those cards in large numbers, banks may cut back on credit card rewards programs to offset lost interchange revenue, according to Investing.com. Visa and Mastercard shares rose 1.7% and 2%, respectively, after the ruling — a sign that Wall Street views the deal as a win for the networks.
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