Posted: June 15, 2026 | Updated: June 15, 2026 at 4:21 PM
For 21 years, every time a customer tapped a credit card at a U.S. checkout counter, a small slice of that sale quietly disappeared into a fee most shoppers never see. Merchants have spent two decades arguing that those “swipe fees” were rigged — and on June 9, 2026, a federal judge finally moved the case toward a close. The court approved a sweeping $38 billion Visa-Mastercard swipe fee settlement for roughly 12 million American merchants. After one of the most exhausting legal sagas in modern commerce, relief is now in sight for the businesses that have footed the bill all along.
While the card fee wars are far from over, the ruling offers the clearest path yet toward lower card processing fees, more options for merchants, and a better balance of power. This article will outline the implications of the ruling, the historical timing, and the impact on retail customers and merchants, from large corporations to small businesses.
U.S. District Judge Brian Cogan of the Eastern District of New York has called the revised swipe fee settlement “fair, reasonable, and adequate,” and granted it preliminary approval. This language is important because “fair, reasonable, and adequate” is the legal standard a class-action settlement must fulfill before it is eligible for final approval. Cogan is therefore likely to approve the settlement this year, after merchants have had the opportunity to weigh in during the comment period.
The settlement applies to about 12 million merchants who accept Visa and Mastercard. The settlement is the result of a case originally filed in 2005, when merchants accused the payment networks and their partner banks of colluding to fix interchange fees. The positive development in this case is especially important because this approval is almost two years after Judge Margo Brodie, also of the Eastern District of New York, rejected the previously proposed settlement of $30 billion in June 2024 because the savings for merchants were, in her opinion, “paltry.”
The networks went away, sweetened the terms, and returned in November 2025 with a more extensive offer. For background about that previous rejection, see the Reuters account of the 2024 ruling. That revised offer is what recently won the court’s approval.
Estimates show that the total value the deal delivers to merchants is around $38 billion. The mechanics of the deal are where the real value is found. The settlement lowers credit card interchange rates by 10 basis points, or one-tenth of a percent, for each network’s rate schedule for up to five years. It also sets a 1.25% rate cap on standard credit cards for 8 years.
To give some context, in 2024, U.S. merchants’ weighted-average swipe fees for Visa and Mastercard transactions were approximately 2.35%, according to the Nilson Report, which tracks the industry. Daily retail transactions are in the millions, so even a small fee adds up.
Merchants are receiving more than simple rate reductions; they are receiving something they have long wanted: choice. The settlement achieves a long-term goal of merchants by eliminating the networks’ “Honor All Cards” rule, which mandated that merchants accept all Visa and Mastercard products, including premium rewards cards that carry high fees. The settlement gives merchants the new right to refuse higher-cost premium and commercial cards, as well as new rights to add surcharges and to offer discounts that steer customers toward lower-cost payment methods.
REJECTED 2024 DEAL VS. APPROVED 2026 SETTLEMENT
| Provision | 2024 proposal (rejected) | 2026 settlement (approved) |
| Total estimated value | ~$30 billion | ~$38 billion |
| Interchange rate cut | ~0.07 pct point (5 yrs) | 0.10 pct point for 5 years |
| Standard consumer cap | Limited / shorter term | ≤ 1.25% for 8 years |
| “Honor All Cards” rule | Largely intact | May decline premium & commercial cards |
| Court outcome | Rejected as “paltry” | “Fair, reasonable, and adequate” |
The practical effect is a more subdued revolution at the checkout counter. Now for the first time, a corner store or a national chain can (in theory) refuse to accept the most expensive rewards card while still accepting everyday debit and credit cards. That flexibility is more impactful than the rate cut. It changes the longstanding, unbalanced relationship between stores and networks.
Two corporate giants sit at the heart of this case. Each framed the court’s approval as vindication, even as the fees they collect now face their tightest constraints in years.
VISA
As the world’s largest payment network, Visa viewed the ruling as a positive development and a potential means of ending the decades-long case. Visa has prioritized flexibility as a key component of the settlement and has argued that the deal offers relief to all merchants, big and small, as well as greater control over payment methods. The ruling also lifted Visa’s stock and strengthened the market’s view that the settlement removes a long-standing legal overhang without adversely affecting Visa’s payment-network economics.
MASTERCARD
Mastercard, the second largest U.S. network, echoed these sentiments. A spokesperson said “closure of this matter” was something Mastercard was looking forward to, adding that the agreement “balances the interests of all parties involved.” Both stocks rose on the news — Mastercard about 2% and Visa about 1.7%. For both companies, the real value of the agreement lies in the finality they have lacked. Their balance sheets have reflected two decades of continuous litigation expense, regulatory uncertainty, and reputational damage.
When it comes to a settlement intended to provide relief to merchants, merchants’ opinions are surprisingly mixed. Trade groups aligned with the payment networks have publicly supported the deal. Richard Hunt, chairman of the Electronic Payments Coalition, described the settlement as a victory for Main Street and accused large corporations of trying to block it to advance their own corporate policies. The Electronic Transactions Association expressed similar sentiments.
However, many of the large corporations are lobbying against the settlement. The National Retail Federation, the largest retail trade organization, opposes it, as do the National Association of Convenience Stores and the Merchants Payments Coalition. During an April hearing, Walmart’s attorney stated the settlement was against their interests. Their complaints are primarily on behalf of large retail merchants. They believe they cannot actually refuse premium reward cards because customers will expect to use them, so this “freedom” to decline them is illusory.
Cogan responded to certain objections directly. He explained that the relevant question wasn’t whether the settlement was the best possible outcome, but whether it was the best achievable given what could be gained or lost at trial — and that the deal didn’t have to be perfect to be approved. Doug Kantor, General Counsel of the National Association of Convenience Stores, has promised that the level of opposition will only increase. Kantor’s association has indicated it will appeal to the Second Circuit U.S. Court of Appeals if the trial court grants final approval.
WHO SUPPORTS THE DEAL — AND WHO IS FIGHTING IT
| In favor | Opposed |
| Electronic Payments Coalition | National Retail Federation |
| Electronic Transactions Association | National Association of Convenience Stores |
| Visa & Mastercard | Merchants Payments Coalition |
| Class plaintiffs’ attorneys | Large retailers (incl. Walmart) |
For proprietors of independent shops and restaurants, as well as service providers, the settlement offers the greatest benefits. These are the businesses with the least ability to contest fees on their own and the smallest margins to absorb costs. Certain fees will become more predictable, as there is a guaranteed rate reduction and hard caps on the costs of standard consumer cards. The new surcharging and steering rights allow small businesses to save costs and to direct customers toward lower-cost payment options, in compliance with network rules.
Unfortunately, not everyone will reap the benefits of the settlement to the same degree. There are four main things merchants get from this deal, and they land very differently depending on size. The larger chains will keep feeling they’re missing out, while smaller merchants stand to gain the most.
FOUR THINGS MERCHANTS GET
| Lower interchange | A 0.10 percentage-point cut applied across rate schedules for five years. |
| A hard rate cap | Standard consumer credit cards capped at 1.25% for eight years. |
| Card-acceptance choice | Freedom to decline the priciest premium and commercial cards. |
| Steering power | New rights to surcharge and to offer discounts that guide card choice. |
The impact of cheaper processing on prices is less clear. In theory, processing cost reductions allow merchants to lower prices. In practice, the savings per transaction are small, and history provides little confidence that merchants will actually lower prices. The effect seen by the consumer is more likely to be negative. As merchants gain the ability to impose surcharges, some customers may begin to see line items for the privilege of paying with a high-fee rewards card.
There is a subtle tension here as well. The rewards programs that consumers love — cash back, airline miles, hotel points — are funded by the interchange fees that this settlement reduces. If merchants start pushing customers away from premium cards, rewards programs will be less sustainable. That effect is more likely to be seen in the long term than in the short term.
It is important to identify the current state of this situation. The court has not completed a final ruling — this was only a preliminary one. The next step will be to notify the 12 million merchants in the class. Then the court will collect objections and hold a hearing to evaluate whether the proposal is fair. After that hearing, Cogan will determine whether to grant final approval. Cogan can expect opposition at this hearing, and at least one major trade group has committed to appealing to the Second Circuit after final approval is granted.
In this case, the resolution has not yet been secured. If an appeal succeeds, the parties could be forced back to the negotiating table, which would be disheartening to those who have followed this case since its inception in 2005. Currently, however, the proposed resolution has passed the most difficult step. It appears that the most significant obstacles have been cleared, and a resolution is nearly finalized.
After 21 years of litigation, a Brooklyn judge has moved the Visa-Mastercard swipe fee settlement to the brink of finality. The revised $38 billion deal cuts interchange fees, caps standard card rates for eight years, and dismantles the rigid “Honor All Cards” rule that long stripped merchants of choice.
The win is loudest for small businesses, contested by the biggest retailers, and uncertain for consumers. Final approval and a likely appeal still lie ahead. But for the first time in two decades, the merchants who have quietly paid these fees on every sale can see a finish line — and it points toward relief.
