Visa-Mastercard $38 Billion Swipe-Fee Settlement Explained

Last updated: October 2026

American businesses paid a record $198.25 billion in swipe fees in 2025 — and in June 2026, a federal judge gave preliminary approval to a settlement meant to claw some of that back from Visa and Mastercard. Then, on September 10, 2026, 978 merchants from all 50 states pushed back hard, telling the court the deal is "riddled with loopholes." A final-approval hearing is now set for November 16, 2026 in Brooklyn. If you run a business that accepts cards, here is what the settlement actually gives you, what it doesn't, and what to do before the judge rules.

The short answer: the settlement cuts credit interchange rates by 10 basis points for five years, caps standard consumer-card rates at 1.25% for eight years, and lets merchants decline certain premium cards — but it leaves the networks' core pricing power intact, which is exactly why nearly a thousand merchant groups want it thrown out. Below, we break down every provision, the 20-year legal saga behind it, and the practical moves worth making before November.

Source: Wikimedia Commons — Two debit cards overlapping (CC BY 4.0)

Where the case stands right now

The litigation is old enough to vote. Merchants sued Visa and Mastercard in 2005, alleging the two networks — which together control about 85% of the U.S. card network market, per the Merchants Payments Coalition — violate federal antitrust law by price-fixing the interchange fees that merchants pay on every card transaction.

The road to the current deal has been anything but straight. A settlement covering the 2012–2013 era, valued at roughly $7 billion, was later overturned on appeal in 2016, sending the class back to square one. A renewed proposal was rejected outright in June 2024. The current version — released in November 2025 — finally won preliminary approval from U.S. District Judge Brian Cogan on June 9, 2026, in the Eastern District of New York.

Judge Cogan's reasoning at the preliminary stage was bluntly practical. His job, he wrote, was not to judge whether the deal is ideal, "but whether it is fair, reasonable, and adequate" — and, as he put it, "none of the objectors have persuaded the Court that they will, or even can, get more through trial." The settlement covers roughly 12 million merchants, and the judge found it "provides more extensive relief" than the version rejected in 2024.

A word of caution for readers outside the United States: this settlement binds U.S. merchants. If you process cards in the Gulf, your interchange economics are set differently — our comparison of the best payment gateways for e-commerce in the UAE and Saudi Arabia covers the fees that actually apply to your market, and cost layers like Kuwait's 15% corporate tax or UAE trade-licence renewal fees often outweigh what any court ruling on swipe fees would move for you. But the direction of travel — regulators and courts pressing card pricing from every side — is global, and the playbook below travels well.

What the settlement actually gives merchants

Strip away the press-release language and four concrete provisions remain. None of them touches the basic structure in which Visa and Mastercard set the interchange rates that merchants pay and banks collect.

1. A 10-basis-point rate cut — for five years

Credit interchange rates drop by 0.10 percentage points (10 basis points) across varying rate tiers, for five years. On a $100 sale, that is ten cents. The Merchants Payments Coalition's math is withering: the average Visa/Mastercard rate was 2.35% in 2024 (per the Nilson Report) and 2.36% in 2025, so the cut "would merely return the average Visa/Mastercard rate to its 2023 level — nearly 20 years after this litigation started."

2. A 1.25% cap on standard consumer cards — for eight years

Standard consumer card rates get capped at 1.25% for eight years. Sounds meaningful until you ask what it covers: merchants' own filing calls it a "small and shrinking fraction of the market," and nothing prevents issuers from recategorizing cards as premium — or adding a third tier above standard — to escape the cap.

3. The right to decline premium cards

For the first time, merchants may refuse certain higher-cost premium and commercial Visa/Mastercard cards, breaking the networks' classic "honor all cards" rule. In practice, the objecting merchants argue, this "does not provide us with a real choice and will have no effect" — because over 90% of credit spending now runs on rewards cards. Declining the cards most of your customers actually carry is not a negotiating tool; it is a way to lose customers.

4. Surcharge and steering rights

Merchants gain clarified rights to surcharge card payments (up to 3%) and to offer discounts for cheaper payment methods. The merchants' objection: surcharges "make consumers angry at merchants," a patchwork of state rules and network conditions "make surcharging effectively unworkable," and networks could charge surcharging merchants more — "wiping out any benefit of this provision."

Source: Wikimedia Commons — Ingenico iCT250 payment terminal (CC BY 4.0)

One more thing the settlement delivers, and it is the part merchants fear most: a release of claims. The deal grants the networks sweeping legal immunity — covering not just past claims but, in the objectors' words, claims of "alarmingly uncertain" duration that could have covered "any" merchant fees and even "new conduct and new injuries." Five years of modest fee relief in exchange for an open-ended lawsuit ban is the trade at the heart of the objection.

Why 978 merchants call it "riddled with loopholes"

On September 10, 2026, a letter landed in the Brooklyn courtroom signed by 978 merchant trade associations and businesses — small, medium and large retailers, restaurants, supermarkets, convenience stores and gas stations from all 50 states, D.C. and Puerto Rico. Their opening framing deserves to be quoted directly: the settlement grants "sweeping liability immunity" while delivering "temporary and meager relief that is riddled with loopholes."

Their specific objections, each laid out in the letter:

• The cut is too small and half of it isn't even real. The 10-basis-point reduction applies only to bank interchange fees. The network fees paid to Visa and Mastercard themselves "continue to rise" — so a meaningful slice of merchant card costs keeps climbing under the deal.
• The immunity is wider than the relief. A five-year fee change against a lawsuit ban of uncertain endpoint, covering claims that "could have" been raised and future conduct.
• The opt-out from premium cards is illusory. With over 90% of credit spending on rewards cards, a right to refuse premium plastic amounts to a right to turn away nearly all card spend.
• The cap misses the market. Standard cards are a shrinking share, and issuers can re-tier.
• Surcharging backfires. Customers blame the merchant, state laws complicate it, and the networks can price it away.

Doug Kantor, an executive committee member of the Merchants Payments Coalition, did not mince words: "The proposed settlement is subterfuge for approving the bad practices of the credit card industry," he said, adding that "the vast majority of merchants and other businesses that accept credit cards oppose the proposal" and that "it should be rejected just like it has been in the past." The letter closes on the same note: "The courts have rejected these efforts twice before and should do so again."

It is worth being precise about who these objectors are: the signers "had no part in negotiating" the deal, which was struck between the networks and class attorneys. Walmart — whose lawyer objected at an April 27 hearing — the National Association of Convenience Stores, and the National Restaurant Association all line up against. The NACS has already said it will appeal to the Second Circuit Court of Appeals if final approval is granted. So even a green light on November 16 may not end this.

The numbers behind 21 years of litigation

To understand why merchants are fighting over what looks like small change, stack the numbers up:

• $198.25 billion — record total swipe fees paid by U.S. businesses in 2025, per the Merchants Payments Coalition.
• 2.36% — the average Visa/Mastercard rate in 2025 (2.35% in 2024, per Nilson).
• 80% — the increase in swipe fees since the pandemic.
• $1,200+ per year — the estimated swipe-fee cost passed to the average American family.
• 85% — Visa and Mastercard's combined share of the card network market.
• $17 billion per year — what merchant groups estimate businesses would save under the Credit Card Competition Act, the congressional alternative to litigation.

That last line matters. Even while fighting in court, merchants have been lobbying Congress for the Credit Card Competition Act, which would require large banks to enable at least a second network on their cards. The court fight and the legislative fight are two doors into the same room — and President Trump and Vice President Vance have both publicly backed swipe-fee reform, per MPC's own announcements, which keeps the legislative door open regardless of what Judge Cogan decides.

If you sell online, interchange is only one layer of your cost stack — subscription, referral and fulfillment fees can quietly exceed it. We broke down Amazon seller fees in 2026 line by line for exactly this reason: the merchants who protect their margins audit every layer, not just the loud one.

Source: Wikimedia Commons — Wij accepteren Visa & Mastercard (CC BY-SA 4.0)

What Visa, Mastercard and their allies say

The networks' side of the argument is not silent. Visa declined to comment on the latest developments; Mastercard said through a spokesperson that it is "glad to have reached this resolution" in the Grubhub case and, on the class settlement, has said it looks forward "to moving closer to final closure of this matter."

The industry's trade groups go further. The Electronic Payments Coalition — the networks' and issuers' main advocacy arm — celebrated the June approval, with Executive Chairman Richard Hunt calling the deal "a guaranteed win for Main Street." The Electronic Transactions Association also backs it. Their core argument: the settlement delivers real, immediate savings without the disruption of price controls, and years more litigation would deliver merchants nothing but legal bills.

Judge Cogan's own words give that view its judicial anchor: no objector, he wrote, has persuaded the court that they "will, or even can, get more through trial." For a case that has already produced one overturned settlement and one rejected deal in 21 years, the certainty of something now versus the promise of more later is the entire bet.

The Grubhub case that just closed in Chicago

While Brooklyn waits, a parallel track of the swipe-fee war ended quietly in September. A separate antitrust case led by Grubhub Holdings — filed in November 2019 in the Northern District of Illinois — alleged that merchants paid "allegedly excessive interchange fees" when consumers paid by card. The plaintiffs had opted out of the original 2012–2013 settlement precisely to pursue their own damages.

The endgame came fast: Grubhub settled in August (per an August 27 court filing), the last three plaintiffs — the retailer Belk, BJ's Wholesale Club, and packaging supplier Uline — settled the week before publication in mid-September, and U.S. District Judge Edmond Chang formally closed the litigation on Monday, September 14, 2026. The terms were not disclosed. A Mastercard spokesperson said the network is "glad to have reached this resolution and look forward to continuing to grow our relationship" with Grubhub.

Two footnotes make this case more than a curiosity. First, it proves the opt-out strategy — refusing the class deal to sue individually — can extract settlements, even confidential ones. Second, Grubhub itself was acquired the year before for $650 million by Wonder, the food-tech startup founded by billionaire Marc Lore, a reminder of how much money circulates around the food-delivery economics that interchange fees quietly tax.

For operators watching payments M&A as a signal of where fees head next, Stripe's acquisition of OpenRouter — which we covered in "Stripe Acquires OpenRouter" — is another data point: the infrastructure layer of payments keeps consolidating, and consolidation rarely lowers merchant costs on its own.

What this means for your business before November 16

Whether the settlement survives November 16 or dies in Brooklyn (or on appeal), four moves make sense now:

1. Benchmark your effective rate. Pull three months of processing statements and compute your all-in effective rate — fees divided by volume. If you are meaningfully above the ~2.35% weighted average on card-not-present plus standard margins allows, negotiate or re-shop your processor. Settlement or no settlement, processors price to your attention, not to the law.
2. Model the 10-basis-point cut — don't spend it. On $500,000 in annual card volume, 10 bps is $500 a year. Real, but not a strategy. Treat it as a line item, and look for your savings where you control them: interchange optimization, address verification, surcharging where your customers tolerate it.
3. Decide your premium-card posture before you need it. If the right to decline certain premium cards survives, you will face a live choice. For most merchants, declining rewards cards forfeits more revenue than it saves. The exception is sectors with thin margins and price-sensitive regulars — there, a clear sign and a cheaper-payment discount can work. Decide with numbers, not indignation.
4. Watch the legislation, not just the courtroom. The Credit Card Competition Act's estimated $17 billion a year in savings dwarfs the settlement's provisions. If it advances, competition — not a court-ordered haircut — becomes the real story for merchant fees.

And a caution that cuts both ways: none of this touches your obligation to your customers. Surcharging works only where it is legal, disclosed and rare. Steering customers to cheaper rails works only when the cheaper rail is genuinely better. Fee anger is not a business model; a better checkout is.

Frequently asked questions

What does the Visa-Mastercard settlement actually give merchants?

Four things: a 10-basis-point cut in credit interchange rates for five years, a 1.25% cap on standard consumer-card rates for eight years, the right to decline certain premium and commercial cards, and clarified rights to surcharge or steer customers toward cheaper payment methods. In exchange, merchants as a class give up a wide range of legal claims against the networks.

When is the final approval hearing for the swipe-fee settlement?

November 16, 2026, before Judge Brian Cogan at the U.S. District Court for the Eastern District of New York in Brooklyn. Preliminary approval was granted on June 9, 2026. Even after a final approval, opponents including the National Association of Convenience Stores have said they will appeal to the Second Circuit.

Why do 978 merchants oppose the settlement?

In a September 10, 2026 letter, they argued the deal buys "sweeping liability immunity" with "temporary and meager relief": a cut they calculate merely returns rates to their 2023 level, a cap covering a shrinking slice of cards, a premium-card opt-out rendered toothless because over 90% of credit spending is on rewards cards, and surcharging rights they call effectively unworkable.

How much do swipe fees cost US merchants each year?

A record $198.25 billion in 2025, per the Merchants Payments Coalition, with the average Visa/Mastercard rate at 2.36% and fees up about 80% since the pandemic. The cost works out to more than $1,200 a year for the average American family once passed through prices.

Can merchants refuse premium credit cards under the deal?

Yes — the settlement lets merchants decline certain higher-cost premium and commercial Visa/Mastercard cards, ending the strict "honor all cards" rule. In practice, objecting merchants argue it "will have no effect" because the vast majority of card spending runs on rewards cards customers expect to use everywhere.

What was the Grubhub lawsuit about?

Filed in November 2019 in Chicago, Grubhub, Belk, BJ's Wholesale and Uline — merchants who had opted out of the original 2012–2013 class settlement — sued Visa and Mastercard over allegedly excessive interchange fees. The case formally closed September 14, 2026, with final settlements whose terms were not disclosed.

Could the settlement still fall apart?

Yes, through two doors. Judge Cogan could deny final approval at or after the November 16 hearing, swayed by the objections — courts have rejected versions of this deal twice before. Or he could approve it and opponents appeal to the Second Circuit, the same court that overturned the 2012–2013 settlement in 2016.

What to watch next

Circle November 16 on the calendar, but watch three signals around it: whether Judge Cogan narrows the release of claims to save the deal (a common judicial repair), whether the Second Circuit takes an expedited appeal if he doesn't, and whether the Credit Card Competition Act picks up momentum from a courtroom loss. For two decades, the swipe-fee fight has alternated between the courthouse and the Capitol, and each round has reset the economics of every card terminal in the country. Your move as a merchant is smaller and simpler: know your effective rate, keep your options open, and never let a settlement negotiate for you what you can negotiate for yourself.

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Sources

• Payments Dive — Court approves Visa-Mastercard settlement — preliminary approval terms, June 9, 2026
• Payments Dive — Visa, Mastercard settle Grubhub case — Chicago case closure, September 16, 2026
• Merchants Payments Coalition — Nearly 1,000 Merchants Tell Judge Proposed Settlement is 'Riddled With Loopholes' — the September 14, 2026 objection letter and figures
• Nilson Report data as cited by Payments Dive — 2.35% weighted average rate, 2024
• Wikimedia Commons — freely licensed images used in this article