A U.S. federal judge granted preliminary approval on June 9, 2026, to a revised settlement between Visa, Mastercard, and merchants suing over credit card "swipe fees"—the interchange charges that card networks impose on retailers for each transaction.
The $38 billion figure represents cumulative merchant savings projected over the agreement's life through mandatory fee reductions and new merchant rights, not a direct cash payment to any party. The settlement stems from antitrust litigation dating to 2005, in which merchants alleged that Visa, Mastercard, and banks conspired to fix interchange fees and prevent competition. Judge Brian Cogan found the revised settlement "fair, reasonable, and adequate," signaling likely final approval after an earlier judge rejected a $30 billion proposal as insufficient.
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Table of Contents
- What the settlement requires
- Who this affects and the timeline
- How the $38 billion is calculated
- Preliminary approval is not final approval
- What the settlement does not cover
- Frequently Asked Questions
What the settlement requires
The settlement imposes two main categories of relief. First, Visa and Mastercard must cap standard U.S. consumer credit card interchange rates at 1.25% for eight years—the longest durational commitment in the agreement.
Second, the networks must reduce average interchange rates by 10 basis points (0.10%) for five years, a reduction the settlement values at $38 billion in cumulative merchant savings. Merchants also gain new commercial leverage. They may impose surcharges on Visa and Mastercard credit card transactions up to 3%, and may decline entire card categories including commercial cards and premium consumer cards. This reverses decades-old restrictions on merchant pricing power that card networks had enforced through contract terms.
Who this affects and the timeline
The settlement covers the "injunctive relief class" of merchants in the ongoing litigation, affecting over 12 million merchants in the United States. Small retailers, grocery stores, gas stations, and online sellers are all included. consumers may see indirect effects through merchant pricing decisions but are not direct claimants in this settlement.
The settlement is not yet final. Preliminary approval allows the court to send notice to affected merchants, accept objections, and hold a fairness hearing before granting final approval. This process typically takes several months to over a year.
How the $38 billion is calculated
The $38 billion does not go to merchants as cash. Instead, it represents estimated savings merchants will realize if they pay lower interchange fees over the agreement's life. The calculation assumes a 10 basis point reduction applied across millions of transactions annually.
For context, a single basis point equals 0.01%, so a 10 basis point cut equals 0.10% of each transaction total. Actual merchant savings will vary by business size and transaction volume. Large retailers processing billions in card payments annually will see larger absolute savings than small businesses. However, individual merchants receive no direct payment from this settlement.
Preliminary approval is not final approval
Judge Cogan's June 9, 2026 ruling grants preliminary approval only. The court must still complete notice procedures, collect and review merchant objections, and conduct a fairness hearing. During this period, merchants can object to the settlement's terms or opt out entirely.
Settlement opponents will present arguments at the fairness hearing before the judge decides on final approval. The National Retail Federation, representing major U.S. retailers, has already signaled opposition, arguing the relief remains inadequate. Final approval is not guaranteed, though preliminary approval typically signals the judge's strong leaning toward confirmation.
What the settlement does not cover
The settlement addresses only injunctive relief—changes to network rules going forward—and not direct monetary damages for past overcharges. Merchants do not receive compensation for interchange fees they paid prior to the settlement's effective date.
Banks that issue Visa and Mastercard products are also excluded from settlement payment obligations under this agreement. Additionally, the interchange caps and rate reductions are time-limited: the 1.25% cap applies for eight years, and the 10 basis point reduction for five years. Merchants will need to evaluate their pricing strategies if these concessions expire without renewal.
Frequently Asked Questions
Will individual merchants get a check from this settlement?
No. The $38 billion represents projected cumulative savings from lower interchange fees, not direct cash payments to merchants.
What should I do if I own a business that accepts Visa or Mastercard?
Wait for the final settlement notice from the court, which will explain your rights to object or opt out. Monitor communications from your payment processor about when lower interchange rates take effect.
Does this settlement make credit cards cheaper for consumers?
Not directly. The settlement binds merchants and card networks, not card issuers or consumers. Whether merchants pass savings to consumers is a business decision.
What happens if the judge rejects the settlement at the fairness hearing?
The litigation continues, and merchants would continue suing for damages. No fee relief would take effect unless a different settlement is negotiated.