U.S. District Judge Brian Cogan called the revised accord "fair, reasonable, and adequate," though major retail groups plan further challenges
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The settlement covers more than 12 million merchants, and Judge Brian M. Cogan said he expected to ultimately grant final approval, describing the terms as "fair, reasonable, and adequate."
The settlement, which Visa announced in November, would resolve claims stemming from litigation that began in 2005, when merchants accused Visa, Mastercard and banks of conspiring to violate U.S. antitrust laws through the collection of swipe fees, also known as interchange fees. As part of the agreement, swipe fees are set to drop by 0.1 percentage point over a five-year period, and rates on standard consumer cards would be held to a ceiling of 1.25% for eight years.
Another provision breaks up the longstanding "Honor All Cards" rule by giving merchants the ability to selectively accept payment cards based on type — separating commercial, premium consumer, and standard consumer cards — rather than being forced to take every card in a network or none at all. Merchants also received expanded options to impose surcharges on customers.
Visa stock rose 1.7% and Mastercard stock rose 2% on Tuesday, according to Reuters.
Cogan's ruling came nearly two years after a different judge rejected a proposed $30 billion settlement as too small. When District Judge Margo Brodie threw out that earlier accord in June 2024, she concluded that swipe fees would not have fallen to pre-violation levels and that the "Honor All Cards" obligation would have remained intact.
Despite Tuesday's ruling, opposition to the revised settlement remains. Separate statements from the National Retail Federation and the National Association of Convenience Stores characterized the credit card market as "broken" and said the revised terms do nothing to fix it. Objectors, including Walmart $WMT, argued that merchants would still pay too much to accept rewards cards and would remain required to honor all issuers within a given network.
While conceding that a number of the objections raised legitimate points, Cogan said perfection was not the standard he was applying to evaluate the deal. "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," he said.
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