Who Benefits from Preliminary Approval for Visa, MasterCard $38 Billion Settlement?
Visa and MasterCard will likely have to pay out $38 billion to merchants over excessive swipe fees, ruled Judge Cogan.
Quick overview
- Mastercard and Visa are set to pay $38 billion to approximately 12 million merchants due to excessive swipe fees, following a preliminary ruling by U.S. District Judge Brian Cogan.
- The settlement aims to address antitrust concerns and will halt swipe fees for the next five years, although some merchants remain dissatisfied with the terms.
- Merchant groups plan to challenge the settlement, seeking stronger terms and more accountability for credit card companies, citing the current system as broken.
- The settlement allows merchants to block certain types of cards and reduces swipe fees by 0.1%, impacting the overall $118.8 billion in swipe fees expected in 2025.
Mastercard and Visa will need to pay out $38 billion to merchants in a settlement for excessive swipe fees that may be violating antitrust laws in the United States.
U.S. District Judge Brian Cogan ruled Tuesday to approve on a preliminary basis the $38 billion settlement that MasterCard and Visa will need to pay out. The payment would go to around 12 million merchants, and the settlement was brought before the courts by retail trade groups that include the National Retail Federation.
If the settlement is given full approval, payouts would be made to even major retailers that include Walmart and members of the Merchants Payment Coalition. These and other merchants argue that the major credit card companies are conspiring to operate a monopoly and control the credit card market in a way that is not fair to merchants. They say that the companies are charging too much for processing credit card transactions.
Objections Lobbied Against Current Settlement Agreement
Despite the billions of dollars expected from this settlement, many merchants are still not happy with the current terms. The settlement has been argued in courts since 2005 and continuously revised to meet the demands of multiple merchant groups.
The current revision is one that Judge Cogan is happy with, and he called it “adequate and reasonable”. The settlement will stop swipe fees for the next five years and, and judge is likely to approve the current settlement in its entirety. However, a number of merchants are still unhappy wit the settlement’s terms.
Merchant groups are planning to challenge the settlement and lobby for stronger terms and more punishment for credit card companies. They want the credit card market to be fixed, calling the current system broken. One of the objections issued against the current settlement is that it does not permit merchants to reject different cards within the same bank’s network.
The current settlement does give broad powers to merchants, allowing them to block different levels of cards that fall under various categories. For instance, they can accept or reject rewards cards, commercial cards, and others. That brings an end to the “Honor All Cards” rule that has had a chokehold on the market for many years and has frustrated merchants by forcing them to either accept or deny all cards form a given issuer.
The settlement also lowers swipe fees by 0.1% for the next five years. Those fees accounted for $118.8 billion in the United States in 2025 for Visa and MasterCard. In premarket trading MasterCard (MA) stock was up 0.36% and Visa (VISA) climbed 2.64%.
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