By Andrew Miller
If your business takes credit cards, you’re probably one of roughly 12 million merchants in a class action you never joined.
On June 9, Judge Brian Cogan of the Eastern District of New York granted preliminary approval to a $38 billion settlement with Visa and Mastercard.
The case dates to 2005. Two earlier settlements failed, including a $30 billion version that Judge Margo Brodie rejected in June 2024 for leaving fees too high and the network rules intact.
The fees kept climbing the whole time. Merchants paid a record $198.25 billion in card fees last year.
Here’s what this settlement would do about that.
First, the price terms. Interchange, the portion of the swipe fee that goes to the customer’s bank, drops 0.1 percentage point over five years. Standard consumer card rates get a 1.25% ceiling for eight years.
Second, the “honor all cards” rule comes apart.
Right now, accepting Visa means accepting every Visa, including the premium rewards cards that charge merchants the most. The settlement sorts those cards into three buckets: standard consumer, premium consumer, and commercial. The same goes for Mastercard.
Merchants could then choose which buckets they accept. This is the bigger change.
For the first time, a merchant could take standard credit cards and refuse the expensive ones.
The largest retailers want the settlement thrown out.
The National Retail Federation and the National Association of Convenience Stores both said the credit card market is broken and these terms don’t fix it. Walmart’s objection was more specific: refusing premium cards isn’t realistic when your customers carry them and expect them to work.
None of it is settled.
Preliminary approval only means the deal moves forward. Objections are due September 14, and a fairness hearing is set for November 16. After that, the court will decide on final approval.
If it’s approved, the new rules will apply to you automatically.
P.S. Swipe fees are one line on the statement. If the others are the problem, let’s talk.