Visa and Mastercard Settlement: $5.54B Fund, $38B Rules Relief

The Visa and Mastercard settlement is actually two settlements in the same two-decade antitrust case: a $5.54 billion cash fund that began paying merchants in early 2026 for swipe fees charged between 2004 and 2019, and a separate $38 billion rules-relief deal, preliminarily approved by a federal judge in June 2026, that would cut interchange rates and loosen the network rules that govern how merchants accept credit cards.¹ Both track back to In re Payment Card Interchange Fee and Merchant Discount Antitrust Litigation, MDL 1720, filed in 2005 in the U.S. District Court for the Eastern District of New York.

What the Case Is About

Every time a customer swipes, taps, or inserts a Visa or Mastercard, the merchant’s bank pays an interchange fee to the bank that issued the card. Visa and Mastercard set that fee, not the individual banks. Interchange typically accounts for 70% to 90% of what a merchant pays to process a card transaction.² In 2024, U.S. swipe fees across all card brands totaled $236.4 billion, with Visa and Mastercard averaging 2.91% per transaction.³

Merchants sued starting in 2005, arguing this amounted to price-fixing. They also targeted the “Honor All Cards” rule, which forced any merchant accepting a Visa card to accept every Visa card — including expensive rewards cards — regardless of processing cost.⁴ The case eventually split into two tracks: a damages class seeking cash for past overcharges, and an injunctive-relief class seeking changes to network rules going forward.

The $5.54 Billion Cash Fund

Chief Judge Margo K. Brodie granted final approval of the damages settlement in December 2019. It covers all U.S. merchants that accepted Visa or Mastercard between January 1, 2004, and January 25, 2019.⁵ The Second Circuit affirmed the deal in March 2023, with a minor adjustment to service awards.⁴

The claim-filing deadline passed on February 4, 2025. If you did not file by that date, you cannot recover from this fund. If you did file, your share is calculated pro rata based on the Visa interchange fees you paid during the class period relative to the total paid by all class members. Because total interchange during those years far exceeded $5.5 billion, payouts represent only a fraction of what any given merchant paid.⁶

Payments to Date

Judge Brian Cogan approved a partial first distribution in October 2025, and checks started going out in February 2026.⁷ By late May 2026, about $414 million had been paid to roughly 598,000 merchants, with another $4.1 million from that first round still being processed.⁸

A proposed second distribution of at least $182 million would reach about 84,000 additional merchants — roughly 75,000 who were held out of the first round because of business-name variances ($125 million) and about 8,400 with tax-ID issues ($56.2 million).⁸ If your claim was flagged for either reason, this is the round to watch.

Roughly $1.5 billion in the fund remains idle, and another $3.35 billion is reserved pending two appeals: one from gasoline retailers arguing they were improperly included as indirect purchasers, and one involving merchants who processed through Block’s Square platform. More than 500,000 claims are still working through a multi-step dispute process handled by claims administrator Epiq, with retired magistrate judge James Orenstein reappointed as special master for a two-year term starting June 2026 to resolve disputes the administrator cannot.⁸ The settlement website says at least one more distribution will follow, giving merchants the difference between their initial check and their full pro rata share once all claims are resolved.⁶

The $38 Billion Rules-Relief Settlement

Judge Brodie rejected an earlier version of the injunctive-relief deal in June 2024, writing that the court was “not likely to grant final approval” because fees would remain above pre-violation levels and merchants would still be effectively forced to accept every card in a network.⁹ The parties returned to mediation and filed a revised agreement on November 10, 2025.¹⁰ On June 9, 2026, Judge Brian Cogan granted preliminary approval, calling the revised deal “fair, reasonable, and adequate.”¹

What Would Change

The revised settlement, if it survives to final approval, affects more than 12 million merchants:

Visa and Mastercard must cut systemwide average effective credit interchange rates by at least 10 basis points (0.1 percentage point) for five years.¹¹
Standard consumer credit card interchange is capped at 1.25% for eight years.¹¹
The Honor All Cards rule loosens: merchants can accept standard consumer credit cards while declining premium or commercial cards.¹²
Merchants gain broader surcharging rights at the brand or product level, capped at 3% or the full cost of acceptance, whichever is lower.¹³
Visa and Mastercard will fund $21 million in merchant education on the new rights.¹⁰

Economists Joseph Stiglitz and Keith Leffler, testifying for the plaintiffs, projected the changes could save merchants $38 billion by 2031 and produce $224 billion in total benefits over the life of the agreement.¹²

Who Is Fighting It

The deal is not final. A fairness hearing and Judge Cogan’s final approval still lie ahead, and major merchant groups have said they will keep pushing back.

The National Retail Federation called the settlement “all window dressing and no substance,” arguing that a 0.1-point reduction against an average swipe fee of 2.35% is trivial and that the new card-choice rights are “meaningless” because 85% of cards in circulation are rewards cards merchants cannot realistically refuse.¹⁴ The NRF said it will participate in the next phase of proceedings.¹⁵

Walmart described the deal as a “gift” that lets the networks “lock in anticompetitive conduct” without fear of challenge from large merchants.¹⁶ The Merchants Payments Coalition argued the deal leaves centrally set interchange rates untouched and does nothing about the separate network fees Visa and Mastercard charge on top of interchange.¹⁷ Judge Cogan acknowledged many objections had merit but wrote that “the question is not whether the amended settlement constitutes the best possible recovery, end stop — it’s whether the amended settlement constitutes the best possible recovery in light of what can be gained and lost through trial.”¹²

What It Means in Dollars for a Working Merchant

Whether the rate cut reaches you depends on how you pay for card processing. If you are on interchange-plus pricing, where your processor passes through the actual interchange rate and adds a markup, the 10-basis-point reduction flows straight to your bottom line. A business processing $100,000 a month in credit sales would save roughly $1,200 a year from the rate cut alone.¹⁸

If you use a flat-rate processor like Square, Stripe, or PayPal, you likely will see nothing. Those platforms bundle interchange into a single rate and typically keep the difference when interchange drops rather than passing it through.¹⁸

The bigger practical shift may be the acceptance and surcharging rights. Being able to decline premium cards, or to add a surcharge that reflects your actual cost of acceptance, is leverage merchants have never had. Whether small businesses will use it is another question, since refusing a customer’s rewards card risks losing the sale. The $21 million education fund is built into the settlement partly for that reason.

The Parallel Track in Congress

Several merchant groups opposing the settlement are pushing a legislative alternative. The Credit Card Competition Act, sponsored since 2022 by Senators Dick Durbin and Roger Marshall, would require large banks to enable credit card transactions to be routed over at least two unaffiliated networks, introducing direct competition on interchange rates.¹⁹

The bill has been reintroduced as S. 3623 in the 119th Congress.²⁰ Sponsors tried to attach it to a housing bill in March 2026, but the Senate passed the underlying bill without it. President Trump has backed the concept, calling interchange fees a “Swipe Fee ripoff,” while the Electronic Payments Coalition, representing banks and networks, opposes the bill. Doug Kantor, general counsel for the National Association of Convenience Stores, told Payments Dive the bill’s sponsors “are open to any opportunity to get a vote and feel like the banks can’t duck this vote forever.”¹⁹

Between the two tracks — one settlement already paying out, another under active challenge, and Congress still on the sidelines — the economics of accepting a Visa or Mastercard are set to keep shifting. Swipe fees for the two networks alone reached $118.8 billion in 2025, up from $25.6 billion in 2009, which is why the fight is nowhere near over.¹⁶

1
Reuters. US Judge OKs Visa Mastercard $38 Billion Swipe Fee Settlement
2
Stripe. Interchange Fees 101: What They Are, How They Work, and How to Cut Costs
3
Merchants Payments Coalition. Credit and Debit Card Swipe Fees Totaled $236 Billion in 2024
4
Justia. In Re Payment Card Interchange Fee and Merchant Discount Antitrust Litigation
5
Robbins Geller Rudman & Dowd LLP. In Re Payment Card Interchange Fee
6
Payment Card Settlement. Frequently Asked Questions
7
Payment Card Settlement. Payment Card Interchange Fee Settlement
8
Payments Dive. Visa Mastercard Swipe Fee Fund Has Paid $414M
9
Merchants Payments Coalition. Merchants Welcome Order Officially Rejecting Flawed Visa/Mastercard Swipe Fee Settlement
10
U.S. Securities and Exchange Commission. Visa Inc. Exhibit, Superseding and Amended Class Settlement Agreement
11
Payments Dive. How the Visa Mastercard Card Fee Case May End
12
The Daily Record. Judge Approves Visa Mastercard Swipe Fee Settlement
13
Grant & Eisenhofer P.A. Memorandum of Law in Support of Motion for Preliminary Approval
14
National Retail Federation. Retailers Call Reported Swipe Fee Settlement All Window Dressing and No Substance
15
National Retail Federation. NRF Responds to Preliminary Approval of Proposed Credit Card Swipe Fee Settlement
16
Journal Record. US Judge Approves Visa Mastercard $38 Billion Settlement
17
Merchants Payments Coalition. Merchants Say Reported Credit Card Swipe Fee Settlement Proposal Fails Once Again
18
Nationwide Payment Systems. The Visa Mastercard Settlement 0.10% Cut: Why Flat Rate Merchants Won’t See Savings
19
Payments Dive. CCCA Seeks New Path to Passage
20
Congress.gov. S.3623 – Credit Card Competition Act of 2026