Key facts
- U.S. District Judge Brian Cogan granted preliminary approval to a revised $38 billion settlement between Visa, Mastercard, and merchants.
- The settlement resolves a 2005 lawsuit accusing the card networks of violating U.S. antitrust laws.
- Visa and Mastercard agreed to lower swipe fees by 0.1 percentage point for five years.
- Standard consumer rates would be lowered to no more than 1.25% for eight years.
- Merchants will have more options to impose surcharges and choose which card categories to accept, ending the 'Honor All Cards' rule.
- Supporters estimate the changes could save merchants $38 billion by 2031 and provide $224 billion in overall benefits.
U.S. District Judge Brian Cogan has granted preliminary approval to a revised $38 billion settlement between Visa, Mastercard, and merchants who accused the card networks of violating antitrust laws by charging excessive "swipe fees" for payment processing. This decision follows the rejection of a previous $30 billion settlement in June 2024 by U.S. District Judge Margo Brodie, who found it insufficient.
The lawsuit, initiated in 2005, alleged that Visa, Mastercard, and banks conspired to inflate fees. The revised settlement aims to resolve this protracted legal battle.
Under the terms of the agreement, Visa and Mastercard will lower swipe fees by 0.1 percentage point for five years. Standard consumer credit card rates will be capped at 1.25% for eight years. A key change allows merchants more flexibility to impose surcharges and to choose whether to accept specific card categories, effectively ending the "Honor All Cards" rule.
Supporters, including Nobel laureate Joseph Stiglitz, estimate the changes could save merchants $38 billion by 2031 and provide $224 billion in overall benefits to merchants and consumers. However, groups like the National Retail Federation and the National Association of Convenience Stores oppose the settlement, arguing it fails to address fundamental issues in the credit card market and plan further challenges.