Judge Signals End to 20-Year Visa-Mastercard Fee Fight

A judge has signaled that an end may be in sight to a legal battle between merchants and leading payment networks Visa and Mastercard that started more than 20 years ago.

In 2005, merchants accused the networks and banks of colluding to break antitrust laws in the U.S. through conduct involving interchange fees, according to a Reuters report. The merchants believe the card networks charge too much through the fees, which the Merchants Payments Coalition says average 2.36% of a transaction.

Brian Cogan, a U.S. District Judge in Brooklyn, gave preliminary approval to Visa and Mastercard’s settlement, ruling the settlement was not only adequate but also reasonable and fair, the report revealed. 

The settlement covers more than 12 million merchants, with supporters estimating about $38 billion in relief.

The supporters’ estimate of $38 billion in relief may seem large. After all, interchange fees, also sometimes referred to as swipe fees, are just a small fraction of the total cost of a purchase. But those minor fees can add up to big dollars over many transactions.

The estimated $38 billion settlement applies to more than 12 million merchants.

For Visa and Mastercard credit cards, interchange fees came in at greater than $118 billion in 2025, according to the Merchants Payments Coalition. That’s an increase of more than $7 billion over where those fees stood just one year earlier.

Under the agreement, Visa and Mastercard would lower swipe fees by 0.1 percentage point for five years and cap standard consumer card rates at no more than 1.25% for eight years.

In a post on the Electronic Payments Coalition’s website, Richard Hunt, Executive Chairman of the group, said that corporate megastores and their lawyers want to block the agreement, but they shouldn’t.

“This small business credit card agreement delivers nearly a quarter trillion dollars in relief,” Hunt said. “It is a guaranteed win for Main Street and provides meaningful solutions for businesses and consumers. Corporate megastores should support this free-market, private-sector agreement.”

Not everyone shares Hunt’s perspective that the agreement is a win. Count the National Retail Federation (NRF) among those parties that are disappointed in the judge’s decision to give preliminary approval to the settlement. The federation said in a press release that the payments market is broken and lacks competition.

“The proposed settlement offers no meaningful relief and leaves intact the underlying system that enables Visa and Mastercard to dictate the rules and costs that merchants and consumers must bear,” the NRF added.

Supporters say merchants stand to gain from the settlement. Under the agreement, merchants wouldn’t have to accept all credit cards and they would have more flexibility to impose surcharges on card transactions. 

The classifications of cards that merchants could decide to accept or not include commercial cards, premium cards for consumers such as those that offer rewards, and standard consumer credit cards. So merchants will have options if they feel the cost of accepting certain cards isn’t worth it.

$0B$224B The overall amount in benefits the settlement could bring to merchants

“Whether all merchants will avail themselves of that relief is to be seen,” Cogan wrote regarding the settlement, according to Payments Dive. “As for whether all merchants can avail themselves of that relief, the answer is clearly yes.”

Consumers who prefer rewards cards could face fewer payment options if some merchants stop accepting certain premium or rewards-card categories. But cardholders may also save money if merchants pass on some of the cost savings they’ll realize from the agreement.

Joseph Stiglitz, a Professor at Columbia University, and Keith Leffler, a University of Washington Professor, said the changes could put merchants in a position to save $38 billion by 2031 and bring overall benefits of more than $224 billion to groups including consumers, according to Reuters. 

Stiglitz knows a thing or two about market impacts. He won the Nobel Prize in Economics in 2001, and he’s authored numerous books on economics.

The news of Cogan’s preliminary approval is significant. However, it doesn’t mean the discussion is over. The report stated that he is likely to give final approval to the settlement eventually. Still, opponents could continue to challenge the deal before final approval.