A U.S. district judge has given the green light for a proposed $38 billion settlement tied to Visa Inc. (V) and Mastercard Incorporated( MA), stemming from a long-standing antitrust lawsuit filed by over 12 million merchants concerning credit card processing fees.
This decision is a key step in a legal saga that dates back to 2005, though it still needs final approval from the court. This case revolves around interchange fees often called swipe fees that merchants incur whenever customers use credit cards.
Merchants claimed that Visa and Mastercard charged exorbitant fees and enforced rules that hindered competition. Reports indicate that in 2025, merchants shelled out nearly $119 billion in swipe fees just to process card transactions.
As part of the proposed deal, Visa and Mastercard would cut interchange fees by 0.1 percentage point for five years. Plus, consumer card fees would be limited to 1.25% for eight years, whereas in 2024, merchants faced an average processing fee of 2.35%. The settlement would also do away with the requirement to "honor all cards," enabling merchants to turn down specific high-cost premium and rewards cards.
Additionally, businesses would have more leeway to impose surcharges on customers who use higher-fee cards or to offer discounts for cheaper payment options. While these changes could lead to lower processing expenses for merchants, it's still uncertain if consumers will benefit from lower prices.
Some industry groups, like the National Retail Federation, are pushing back against the settlement, arguing that it doesn't tackle the larger payment network framework that impacts merchant costs. The case still needs more court scrutiny before any of the settlement terms can kick in.
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