A federal judge in Brooklyn has granted preliminary approval to a revised $38 billion class-action settlement between Visa, Mastercard, and millions of US merchants. The deal resolves antitrust claims that have plagued the payment networks for over two decades.
The agreement mandates a 0.1 percentage point reduction in swipe fees over five years and caps standard US consumer credit card interchange rates at 1.25% for eight years. This represents a significant shift from current average fees of approximately 2.35%.
Crucially, the settlement dismantles the longstanding "honor all cards" policy. Merchants now retain the right to decline specific high-fee Visa or Mastercard-branded cards and can impose surcharges on certain transactions. This marks a meaningful departure from previous restrictions on how retailers process payments.
While the total payout increases by roughly 27% compared to a rejected $30 billion proposal in June 2024, merchant coalitions argue the changes remain insufficient. Critics note that banks, not the networks themselves, technically set these fees, creating a coordinated system where no single entity appears directly responsible.
Final court approval is expected later in 2026, though appeals may delay implementation. For investors, the settlement removes a major cloud of legal uncertainty. However, it also establishes a fee ceiling that models must account for and potentially emboldens further regulatory scrutiny, including the proposed Credit Card Competition Act.