Court approves Visa-Mastercard settlement covering about 12 million merchants

A federal judge has approved a settlement between Visa, Mastercard and merchants in a long-running interchange fee class action, moving a decades-old dispute closer to closure. For PSPs, acquirers and banks, the details matter because the deal changes pricing, card-acceptance rules and merchant steering rights.

1. U.S. District Judge Brian Cogan of the Eastern District of New York in Brooklyn said the agreement “provides more extensive relief” than the prior settlement the court rejected in June 2024. He granted preliminary approval after finding the deal “fair, reasonable, and adequate” under the court’s standard.
2. The settlement covers about 12 million merchants that were part of the class action. The litigation dates to mid-2005 and is aimed at ending 21 years of disputes over interchange fees.
3. Under the proposed terms, credit interchange fee rates would be trimmed by 10 basis points on varying rates for five years, and a 1.25% rate would apply to standard consumer cards for eight years. The deal would also let merchants decline some higher-cost Visa and Mastercard premium and commercial credit cards, which is a break from the networks’ “honor all cards” rule.
4. Merchants would gain the right to add surcharges and offer discounts to steer customers away from cards with higher interchange fees. Large merchants, including Walmart’s counsel, objected that they cannot easily reject premium cards because they are popular with customers and come with travel and cashback rewards.
5. In 2024, merchants paid a 2.35% fee on Visa and Mastercard transactions, according to a weighted average reported by Nilson Report last year. Mastercard said it looks forward “to moving closer to final closure of this matter,” while Visa called the approval “an important step toward potential resolution of this decades-long litigation.”

The hearing that preceded the ruling took place on April 27, when Cogan heard objections from several large merchants. For high-risk operators, the practical point is simple: the settlement may change acceptance economics, but it also creates more room for merchant-level steering, which tends to matter most where card mix and average ticket size are already under pressure.