Visa and Mastercard Secure $38B Settlement Approval with 12 Million Merchants
V•A federal judge preliminarily approved a $38 billion settlement with more than 12 million merchants over swipe fee claims. It cuts interchange rates by 0.1% over five years, caps consumer card fees at 1.25% for eight years and lets merchants choose accepted card types.
1. Judge Grants Preliminary Approval
A federal judge issued preliminary approval for a $38 billion settlement between Visa, Mastercard and over 12 million merchants. Judge Brian M. Cogan described the revised terms as fair, reasonable and adequate, and indicated he expects to grant final approval after considering remaining objections.
2. Key Settlement Terms
The agreement reduces swipe fees by 0.1% over a five-year period and caps standard consumer card interchange rates at 1.25% for eight years. It also dismantles the "Honor All Cards" rule, allowing merchants to accept or reject specific card types and to impose surcharges on customers.
3. Merchant Objections and Industry Response
Major retail groups including the National Retail Federation and Walmart have objected, arguing that rewards card fees remain too high and that the new terms fall short of fully fixing the market. Despite criticism, the judge ruled that the settlement represents the best achievable outcome without a protracted trial.
4. Impact on Visa and Merchant Relations
Visa and Mastercard shares rose following the preliminary approval, reflecting investor relief at resolving litigation dating back to 2005. Merchants stand to gain greater pricing flexibility and lower processing costs, while Visa faces a multi-year reduction in interchange revenue.
