US Judge Grants Preliminary Approval to $38 Billion Swipe Fee Deal

U.S. District Judge Brian Cogan’s preliminary approval arrives nearly two years after his colleague, Judge Margo Brodie, struck down a proposed $30 billion deal, arguing it failed to address the root of the antitrust concerns. The current litigation dates back to 2005, when merchants first accused the card giants and their partner banks of conspiring to inflate swipe fees—the interchange costs retailers pay for every transaction.

Under the proposed terms, Visa and Mastercard would reduce swipe fees by 0.1 percentage points for five years, while capping standard consumer rates for eight years. Additionally, the deal seeks to dismantle the long-standing "Honor All Cards" rule, granting merchants greater flexibility in imposing surcharges or choosing which specific card categories to accept. Economists Joseph Stiglitz and Keith Leffler, acting as experts for the plaintiffs, project the deal could save merchants $38 billion by 2031, with broader benefits reaching $224 billion.

Despite the court's move, heavyweights like Walmart and the National Retail Federation remain staunchly opposed. Critics argue the settlement functions as a "gift" to the payment networks, locking in anticompetitive behaviors while leaving merchants with little power to reject high-cost rewards cards. With swipe fees reaching $118.8 billion in 2025 alone, the divide between the card networks and the retail sector persists, as objectors contend the fee reductions are insufficient to offset decades of market dominance.