US approves US$38 billion agreement between Visa and Mastercard on transactions

A U.S. judge has granted preliminary approval to Visa and Mastercard's revised $38 billion settlement with merchants who accused the card networks of charging excessive fees for processing payments with their credit cards.

Federal Judge Brian Cogan of the Brooklyn District of New York said the settlement, which covers more than 12 million merchants, was "fair, reasonable and appropriate" and would likely receive final approval.

Cogan handed down the decision on Tuesday, nearly two years after another judge rejected a proposed $30 billion settlement as insufficient.

Some groups, including the National Retail Federation, the world's largest retail industry association, have also been introduced to the new agreement and are planning further challenges.

The settlement announced in November was intended to end litigation that began in 2005, when merchants accused Visa, Mastercard and banks of conspiring to violate U.S. antitrust laws, including by charging "transaction fees."

Transaction fees would be reduced
Also known as foreign exchange fees, transaction fees totaled $118.8 billion for Visa and Mastercard in the United States in 2025, an increase from $111.2 billion in 2024 and $25.6 billion in 2009, the Merchants Payments Coalition said.

The average rate was 2.36%.

Visa and Mastercard agreed to reduce transaction fees by 0.1 percentage point for five years, while standard consumer fees would be significantly reduced to a maximum of 1.25% for eight years.

Merchants were also able to choose whether to accept cards in distinct categories: commercial cards, premium consumer cards - including the popular rewards cards that dominate the card market - and standard consumer cards.

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This provision would effectively end the long-standing "Honor All Cards" rule, which requires merchants to accept all Visa and Mastercard cards or none at all.

Merchants also now have more options for charging surcharges to customers.

More objections expected
In independent statements, the National Retail Federation and the National Association of Convenience Stores said the revised agreement did not address a "flawed" credit card market, and NACS general counsel Doug Kantor anticipated that "many more objections" will be raised.

Opponents asserted that merchants would still pay too much for accepted rewards cards and would be required to "honor all issuers" on a given network, meaning they could not accept cards from one bank and reject those from another.

Cogan said many objections had merit, but the deal wasn't perfect.

"Objectors identify several things they would like to do but cannot (e.g., reject cards at the issuer level, charge surcharges at the issuer level) and that they theoretically could do but won't (e.g., reject premium cards)," he said.

"But the question is not whether the amended settlement constitutes the best possible recovery, period - it is whether the settlement constitutes the best possible recovery in light of what can be gained and lost at a trial."

Other filings included Walmart and the Merchants Payments Coalition. None of them spoke immediately.

Source: CNN