A two-decade legal battle between Visa, Mastercard, and merchants over credit card swipe fees appears to be nearing its conclusion. A judge on Tuesday, June 9, granted preliminary approval to the companies’ $38 billion settlement with merchants, initially announced in November. Reuters reported the judge found the settlement to be “fair, reasonable, and adequate” and indicated a high likelihood of final approval.
The dispute, which commenced in 2005, centered on accusations by businesses that Visa, Mastercard, and major banks colluded to violate U.S. monopoly laws. The core of the complaint revolved around the collection of interchange fees, commonly known as “swipe fees,” which merchants pay to process credit card transactions.
Settlement Terms and Concessions
The proposed settlement outlines several key concessions from Visa and Mastercard. These include a reduction in interchange fees by 0.1 percentage points for a period of five years. Furthermore, the agreement grants merchants the flexibility to choose whether they wish to accept U.S. cards within specific categories. Standard consumer rates will be capped at 1.25%, and merchants will gain increased autonomy to impose surcharges on credit card users, a move intended to offset some of the processing costs.
Industry Perspectives: Support and Opposition
The Electronic Payments Coalition (EPC), an advocacy group representing credit unions, community banks, and payment card networks, lauded the preliminary approval. In a Tuesday press release, the EPC stated that the agreement guarantees lower processing rates and other concessions totaling “more than $200 billion over eight years.” Richard Hunt, EPC Executive Chairman, characterized the deal as “a guaranteed win for Main Street and provides meaningful solutions for businesses and consumers.” Hunt further criticized “corporate mega-stores, their lobbyists and their lawyers” for attempting to block the agreement in pursuit of “untested, unworkable mandates that only further pad their profits.”
However, the settlement has not been universally embraced by the merchant community. When the agreement was first announced in November, the Merchants Payments Coalition voiced strong objections, labeling the fee reduction as “minuscule.” The coalition expressed concerns that after the temporary cuts expire, Visa and Mastercard would retain the freedom to raise fees without restriction. Further opposition emerged in December, with reports indicating that the National Association of Convenience Stores and the National Retail Federation filed formal complaints against the settlement. This current proposal follows an earlier settlement offer that was rejected in 2024, prompting Visa and Mastercard to present the revised terms.
The preliminary approval marks a significant step towards resolving one of the longest-running and most contentious legal battles in the financial services sector. While the judge’s signal suggests a path to finalization, the continued dissent from prominent merchant groups indicates that the industry remains divided on the long-term implications and fairness of the proposed terms.
