Visa and Mastercard's Landmark $38 Billion Settlement Hits Milestone

A U.S. judge has granted preliminary approval to Visa and Mastercard's revised $38 billion settlement with merchants over swipe fees. This settlement aims to end long-standing litigation dating back to 2005, allowing merchants to impose surcharges and decide which cards to accept, lowering swipe fees significantly.

In a significant development, a U.S. judge has sanctioned the preliminary approval of Visa and Mastercard's revised $38 billion settlement with merchants. This arrangement follows allegations against the card networks of exorbitant payment processing charges.

Judge Brian Cogan, based in Brooklyn, New York, lauded the settlement as "fair, reasonable, and adequate," a substantial improvement over a previously dismissed $30 billion proposal. This lawsuit, originating in 2005, accused Visa, Mastercard, and banks of breaching U.S. antitrust laws through high swipe fees. As part of the settlement, the card networks have agreed to reduce these fees by 0.1 percentage point over five years.

The settlement introduces significant changes, such as giving merchants the power to impose surcharges, and choose which types of cards to accept, effectively ending the "Honor All Cards" rule. Despite some trade groups' objections, Judge Cogan defended the settlement, underscoring its value in light of potential trial outcomes.