A federal judge in Brooklyn has granted preliminary approval for a significant $38 billion settlement between Visa, Mastercard, and millions of merchants across the United States. This case has lingered for nearly two decades as part of an antitrust lawsuit focused on the credit card swipe fees charged to merchants, representing one of the most protracted commercial litigations in U.S. history.
The preliminary approval was issued by U.S. District Judge Brian Cogan on April 27, 2026, leading to a possible final approval later in the fiscal year. This settlement was initially revealed in November 2025, occurring after an earlier proposal, which amounted to about $30 billion, was rejected in June 2024. The court dismissed that first attempt on grounds that the expected financial relief for merchants was too minor to warrant approval.
What changes does the $38 billion settlement bring? The updated agreement includes a more substantial reduction in interchange fees that merchants incur whenever consumers use Visa or Mastercard for transactions. Specifically, this settlement aims to lower these fees by approximately 0.1 percentage points each year for five consecutive years.
Additionally, the arrangement modifies the ‘honor all cards’ rule which previously obligates merchants to accept every card branded by a payment network, irrespective of the associated processing costs. The new terms offer merchants greater autonomy to direct customers toward less expensive payment methods. This amendment addresses concerns that retailers have expressed since the lawsuit was launched back in 2005.
What’s the background of this lawsuit? The original complaint filed in 2005 accused Visa and Mastercard of colluding to establish interchange fees while simultaneously enforcing anti-competitive regulations that inhibited merchants from finding alternatives.
Despite this progress, not everyone is content with the proposed settlement. The National Retail Federation, one of the largest associations representing merchants in the U.S., publicly criticized the revised terms, arguing that the settlement fails to adequately reform the fundamental pricing structures established by Visa and Mastercard. They assert that the agreement merely addresses surface issues rather than tackling the underlying market duopoly that primarily governs card-based payment processing in America.
It is crucial to note that the preliminary approval signifies merely a procedural gateway. The court will now inform class members about the proposed settlement, invite feedback, and conduct a fairness hearing before finalizing its decision.