A federal judge in Brooklyn has granted preliminary approval to a revised $38 billion settlement between Visa, Mastercard and over 12 million American merchants, marking a pivotal moment in the long-running legal battle over credit card interchange fees. U.S. District Judge Brian Cogan deemed the accord “fair, reasonable and adequate,” signalling that final approval is likely, nearly two years after a different judge rejected a $30 billion proposal as insufficient. The ruling clears a path for the largest-ever private antitrust settlement, though significant opposition from retail groups suggests the deal’s journey is far from over.

The settlement aims to resolve allegations that the two dominant card networks illegally colluded with issuing banks to inflate the so-called swipe fees merchants pay every time a customer uses a credit card. Under the new terms, Visa and Mastercard would reduce posted swipe rates by 0.1 percentage points for five years and cap rates at those reduced levels for a further five. The arrangement also promises to loosen the anti-steering rules that prevent retailers from guiding shoppers toward cheaper payment methods. Viewed from Washington, the deal represents a compromise that avoids a protracted courtroom battle and provides merchants with a measure of relief, while leaving the fundamental structure of the card industry intact.

Yet the reception has been mixed, even fractious. The National Retail Federation, the world’s largest retail trade association, remains firmly opposed, arguing the settlement would still allow fees to rise and fails to dismantle the anti-competitive dynamics that have persisted for decades. For many merchants, the 0.1-point reduction is a mere gesture when average U.S. credit card interchange fees remain among the highest in the industrialised world, topping 2 percent per transaction. Analysts in London note that the American approach contrasts sharply with the European Union’s regulatory model, where interchange fees on consumer cards were capped at 0.3 percent years ago, forcing a fundamental recalibration of the payments ecosystem.

The preliminary approval sets the stage for a final fairness hearing, likely later this year, where dissenting voices will have another chance to derail the pact. Should Judge Cogan grant final approval, attention will shift to implementation and enforcement, and to the broader question of whether legislative action in Washington might ultimately prove more transformative than courtroom settlements. From a global perspective, the case is being watched closely, particularly in jurisdictions where interchange battles are still nascent. If the deal survives, it may entrench a model in which litigation yields incremental concessions rather than structural reform, a prospect that leaves merchants in Latin America and Asia—where Visa and Mastercard’s dominance is similarly absolute—contemplating their own paths forward.