A federal judge has given the green light to a $38 billion settlement between Visa, Mastercard and a coalition of merchants, marking a major step in a long-running fight over the fees retailers pay every time a customer swipes a card. The preliminary approval, granted in a US district court, could reshape the dynamics between card networks and the businesses that accept their payments — though critics say the deal leaves the core of the duopoly intact.
The size and scope of the settlement
The $38 billion figure covers a multi-year period of alleged overcharges tied to swipe fees, also known as interchange fees. These are the hidden costs embedded in nearly every credit and debit card transaction, typically amounting to 1.5% to 3.5% of the purchase price. Merchants have long argued that Visa and Mastercard collude to keep those fees artificially high, costing retailers tens of billions of dollars annually.
Under the terms of the settlement, the two networks will reduce interchange fees for a limited time — though the exact reduction schedule and duration were not detailed in the court filing. Merchants will also gain more flexibility to steer customers toward cheaper payment methods, a practice Visa and Mastercard had previously restricted through their so-called “honor all cards” rules.
Why merchants fought back
The lawsuit, originally filed more than a decade ago, accused Visa and Mastercard of operating an illegal price-fixing scheme. The case swelled to include millions of merchants, from giant retailers to small Main Street shops. For years, those businesses watched a growing share of their revenue vanish into swipe fees — a cost they often had to pass on to customers or absorb as thinner margins.
The preliminary approval means the settlement can move toward final approval, with a fairness hearing likely months away. Lawyers for the merchant class have called the deal historic, but some trade groups have refused to sign on, arguing the concessions are too narrow and too short-lived to break what they call a stranglehold on the payments market.
What still worries critics
Competition advocates and smaller merchant groups have warned that the settlement doesn't address the structural problem: Visa and Mastercard control roughly 80% of the US card market. Without stronger antitrust remedies, they say, the networks can simply adjust pricing in other areas to recoup any revenue lost through the settlement's fee cuts.
There's also unease about the opt-out process. Merchants who want to pursue their own lawsuits against Visa and Mastercard — rather than take the settlement payout — must formally exclude themselves before a looming deadline. That deadline hasn’t yet been set, but the court will likely announce it in the coming weeks.
For now, the two card giants have denied any wrongdoing. They said in a joint statement that the settlement resolves uncertainty and allows them to focus on innovation. But the objections from holdout merchants linger. The final approval hearing, if the settlement survives challenges, will determine whether this deal ends the fight — or merely pauses it.
