A U.S. federal judge has granted final approval to a landmark $38 billion settlement between Visa, Mastercard, and merchants over swipe fees, ending a years-long legal battle. The settlement, announced in March 2024, resolves claims that the two payment networks conspired to fix fees charged to merchants for processing credit and debit card transactions.
Key Details of the Settlement
The agreement includes a $5.6 billion payment to merchants, with the remaining amount accounting for temporary fee reductions over several years. Merchants will also gain more flexibility to steer customers toward cheaper payment methods, such as cash or lower-cost cards. The settlement covers approximately 12 million businesses that accepted Visa or Mastercard between 2004 and 2019.
Reactions from Stakeholders
Merchant groups, including the National Retail Federation, have praised the settlement as a significant step toward transparency and competition in the payments industry. However, some smaller retailers expressed disappointment, arguing that the relief does not go far enough to address alleged anticompetitive practices. Visa and Mastercard have maintained that their fees are fair and reflect the value of their networks.
Judge Margo Brodie of the U.S. District Court in Brooklyn called the settlement “fair, reasonable, and adequate” in her ruling. She noted that the agreement avoids the risks and costs of a prolonged trial. The settlement is one of the largest antitrust class action settlements in U.S. history.
Ongoing Regulatory Scrutiny
The approval comes amid broader regulatory scrutiny of payment card fees. The U.S. Congress has considered legislation, such as the Credit Card Competition Act, which would require large banks to enable at least two networks for processing transactions, potentially increasing competition. The Federal Reserve has also taken steps to cap debit card swipe fees.
Visa and Mastercard have faced similar legal challenges in other countries. In 2023, the European Commission fined Mastercard €3.8 billion for anticompetitive practices, while Visa settled a similar case in Australia for $18 million. The companies have also been subject to investigations in Canada, where retailers have long called for lower fees.
The settlement does not affect current swipe fees, which remain a contentious issue for merchants. The National Retail Federation estimates that swipe fees cost U.S. retailers over $100 billion annually. The settlement provides some relief but does not fundamentally alter the fee structure.
Visa and Mastercard have agreed to implement the fee reductions and other changes over the next five years. Merchants who wish to opt out of the settlement have until July 2026 to do so. The settlement also includes provisions for ongoing monitoring to ensure compliance.
