By Jonathan Stempel
NEW YORK, June 9 (Reuters) – A U.S. judge on Tuesday granted preliminary approval to Visa’s and Mastercard’s revised $38 billion settlement with merchants who accused the card networks of charging too much to process payments on their credit cards.
U.S. District Judge Brian Cogan in Brooklyn, New York, said the settlement was “fair, reasonable, and adequate,” and that he was likely to eventually grant final approval.
Cogan ruled nearly two years after a different judge rejected a proposed $30 billion settlement as too small.
The settlement announced in November was intended to end litigation that began in 2005, when merchants accused Visa, Mastercard and banks of conspiring to violate U.S. antitrust laws, including through the collection of “swipe fees.”
Visa and Mastercard agreed to lower swipe fees, also known as interchange fees, by 0.1 percentage point for five years, while standard consumer rates would be lowered to no more than 1.25% for eight years.
Merchants would also get more options to impose surcharges on customers, and could choose whether to accept cards in distinct categories: commercial cards, premium consumer cards — including many rewards cards — and standard consumer cards.
The latter provision would effectively end the longstanding “Honor All Cards” rule, which required merchants to accept all Visa and Mastercard cards or none.
Visa shares rose 1.7% on Tuesday while Mastercard shares rose 2%.
JUDGE REJECTS TRADE GROUPS’ OPPOSITION
Some trade groups, including the National Retail Federation, the Merchants Payments Coalition, and the National Association of Convenience Stores, objected to the revised settlement.
They said it would leave merchants with the unwelcome choice of paying too much to accept the popular rewards cards that dominate the card market, or lose revenue by not accepting those cards.
Objectors also said merchants would still have to “honor all issuers” in a given network, meaning they could not accept one bank’s cards and reject another’s cards.
Walmart was among the objectors, saying the settlement would let Visa and Mastercard lock in anticompetitive conduct that has persisted for more than 30 years.
Cogan said many objections had merit, but the settlement didn’t need to be perfect.
“The objectors identify several things that they want to do but can’t (e.g., rejecting cards at the issuer-level, surcharging at the issuer-level) and that they theoretically can do but won’t (e.g., rejecting premium cards),” he said. “But the question is not whether the amended settlement constitutes the best possible recovery, end stop – it’s whether the amended settlement constitutes the best possible recovery in light of what can be gained and lost through trial.”
Neither the trade groups nor Walmart had an immediate comment.
The card networks welcomed Cogan’s decision. Visa called the settlement an important step toward giving merchants more flexibility in accepting payments, while Mastercard said the accord “balances the interests of all parties.”
Swipe 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, the Merchants Payments Coalition said. The average fee was 2.36%.
NOBEL ECONOMIST SAYS SETTLEMENT COULD HELP CONSUMERS
Supporters of the settlement included the Electronic Payments Coalition, whose members include the card networks and large issuers such as Bank of America, Capital One, Chase and Citibank.
Two experts hired by the plaintiffs, Nobel Prize-winning economist Joseph Stiglitz and University of Washington professor Keith Leffler, said the changes could save merchants $38 billion by 2031 and provide $224 billion of benefits overall, including to consumers.
The $30 billion settlement would have lowered swipe fees by 0.07 percentage point over five years and also allowed more surcharges.
In rejecting that accord in June 2024, U.S. District Judge Margo Brodie said fees would have still been above where they were absent any antitrust violations, and merchants would remain stuck with the “Honor All Cards” rule.
(Reporting by Jonathan Stempel in New York; Editing by Aurora Ellis and Bill Berkrot)
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