On November 10, 2025, Visa and Mastercard announced a revised $38 billion settlement that stems from a 2005 class-action lawsuit by merchants. The suit accused Visa, Mastercard, and banks that issue their payment cards of violating antitrust laws, causing merchants to pay excessive fees.
This settlement follows a $5.54 billion settlement, stemming from the same 2005 lawsuit, which was finalized and approved by the Second US Circuit Court of Appeals in 2023. The 2023 settlement provides financial payments to merchants who accepted Visa or Mastercard between 2004 and 2019. It did not address all of the issues raised in the 2005 lawsuit, including a dispute over the rules Visa and Mastercard impose to accept their cards.
This new settlement is designed to resolve the remaining issues raised in the 2005 lawsuit. An attempt was made to settle the suit in March 2024, but the proposed $30 billion settlement was subsequently rejected by US District Judge Margo Brodie who deemed it inadequate.
The new $38 billion settlement includes a 0.1% reduction in interchange fees for five years as compared with a 0.07% reduction offered in the settlement which the court rejected in 2024. It also gives merchants expanded ability to impose surcharges when customers use credit cards.
Particularly significant, the new settlement does away with the "honor all cards rule" which means a merchant will be able to pick and choose which types of Visa or Mastercards it wants to accept. As a result, merchants will be able to refuse cards that have higher interchange fees, such as airline and hotel reward cards. Currently, a merchant is required to accept every type of card issued by a network.
Attorneys representing the merchants say the $38 billion settlement value reflects the projected reduction in interchange fees through 2031, as estimated by two experts including Nobel Prize-winning economist Joseph Stiglitz. They believe that together, the changes resulting from the settlement can save merchants $224 billion, increase competition and benefit consumers.
According to the Nilson report, merchants paid card issuers $83 billion in 2024, up 71% from 2019. The increase has been driven by consumers shifting away from cash towards credit cards as well as increased transaction fees.
Merchant groups including the Merchants Payment Coalition, the National Association of Convenience Stores, and the National Retail Federation have called for the settlement to be rejected, saying it is inadequate. They also assert that ending the "honor all cards rule" is meaningless because 80% of customers use reward cards, making it infeasible for merchants to stop accepting those card types.
The Electronic Payments Coalition, whose members include the card networks and large issuers, supports the settlement. It asserts that the settlement will reduce interchange fees below the levels that would be achieved by the Credit Card Competition Act bill sponsored by Senators Richard Durbin (D-IL) and Roger Marshall (R-KS). The bill was introduced in 2022 but has failed to attract sufficient support to move forward.
To take effect, the settlement needs to be approved by the same judge that rejected the settlement proposed in 2024.
Verisave will continue to provide updates as they become available. For more information see this Reuters Article and this Wall Street Journal Article on the proposed settlement.
