A U.S. federal judge has approved a revised $38 billion settlement between Visa and Mastercard and merchant groups, ending a long-standing dispute over interchange fees. The agreement, which includes reduced transaction fees and the end of the “Honor All Cards” policy, was deemed “fair, reasonable, and adequate” by Judge Brian Cogan.

Judge Approves Revised $38 Billion Settlement

A U.S. federal judge has given preliminary approval to a revised $38 billion settlement between Visa and Mastercard and merchant groups, resolving a decade-long legal battle over interchange fees. The deal, which reduces transaction fees for merchants and ends the “Honor All Cards” policy, was endorsed by Judge Brian Cogan of the U.S. District Court for the Eastern District of New York, who called it “equitable, reasonable, and adequate.”

The agreement follows years of litigation initiated in 2005, when merchants accused Visa and Mastercard of conspiring to violate antitrust laws by inflating transaction fees. The revised terms, announced in November 2024, lower interchange fees by 0.1 percentage points over five years and cap consumer transaction rates at 1.25% for eight years, according to the Merchants Payments Coalition.

Visa and Mastercard also agreed to allow merchants greater flexibility in rejecting specific card types, effectively ending the “Honor All Cards” rule that required businesses to accept all cards from a network or none at all. The decision marks a significant shift in the payment industry, which saw $118.8 billion in interchange fees in 2025, up from $111.2 billion in 2024, per the Merchants Payments Coalition.

Merchant Groups Oppose Agreement

Despite the judge’s approval, major merchant associations, including the National Retail Federation and the National Association of Convenience Stores, opposed the settlement. They argued the deal would force businesses to either pay higher fees for popular reward cards or risk losing revenue by rejecting them.

“The agreement allows Visa and Mastercard to perpetuate anticompetitive practices that have persisted for over 30 years,” said Walmart, a vocal opponent, in a statement. The company contended that the terms fail to address systemic issues, such as the lack of options to reject premium cards entirely.

Judge Cogan acknowledged the concerns but ruled that the settlement was the “best possible outcome” given the potential risks of a prolonged trial. “The opposition identifies measures they would prefer but cannot implement, such as issuer-level card rejections,” he stated, according to court documents.

Economic Impact and Industry Reactions

The settlement is projected to save merchants $38 billion by 2031, according to economists Joseph Stiglitz, a Nobel laureate, and Keith Leffler of the University of Washington, who were appointed by the plaintiffs. The deal also aims to generate $224 billion in total benefits, including savings for consumers, by reducing fees and increasing competition.

Visa and Mastercard welcomed the ruling, with Visa calling it a “step forward” for merchant flexibility and Mastercard stating the agreement “balances the interests of all parties.” However, the companies have yet to comment on specific details of the fee reductions.

Previous attempts to resolve the dispute faced setbacks. A $30 billion agreement in 2024 was rejected by Judge Margo Brodie, who ruled that fees would remain higher than they would have been without antitrust violations. The revised deal avoids that issue by structuring fees to align with competitive market conditions, according to court filings.

What Happens Next?

The settlement is expected to face final approval in the coming months, pending further court review. If finalized, it could set a precedent for similar antitrust cases in the payment industry. Analysts note that the agreement reflects growing regulatory pressure on big tech and financial institutions to address market dominance and consumer costs.

For now, the ruling underscores the complex interplay between merchant interests, consumer protection, and corporate profitability. As the payment landscape evolves, the impact of this settlement on small businesses and everyday consumers will remain a key focus for regulators and industry observers.